New Obama Administration Policy Will Make 4.2 Million Americans Eligible for Overtime Pay

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The new rule is set to begin taking effect on December 1, 2016.

The Obama Administration is giving millions of Americans the opportunity to qualify for overtime pay for the first time.

Under a new policy designed to cater to deserving middle class workers while also exempting high-paying executives from overtime compensation, administrative, professional and executive employees making less than $47,476 will be eligible to receive overtime pay. The new rule more than doubles the previous exemption amount, which was set at $23,660. As a result of the policy, an estimated 4.2 million more Americans will qualify to receive time-and-a-half pay for any time worked over 40 hours each week.

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Analysts say businesses will likely move to switch a significant portion of salaried workers to hourly and cut hours of non-salaried workers to prevent having to pay overtime costs once the new rule is implemented. However, if punching a clock is all that it takes to be fairly compensated for the work done, most employees who didn't previously have that option will likely have no problem with the new switch. Additionally, hourly employees who have spent years putting in hours for which they were not able to earn overtime pay will likely welcome the much-needed time off they stand to receive as companies make changes to accommodate the new rule. 

While some lawmakers fear these and other measures businesses will be forced to take will hurt company morale and place additional cost burdens on employers, Vice President Joe Biden points out that either way, overworked but underpaid middle class employees who have long awaited this day still win in the end. “The middle class is getting clobbered,” Biden told reporters earlier this week. “If you work overtime, you should actually get paid for working overtime. For the past 40 years, overtime protections have been increasingly weakened.”

The new rule is set to begin taking effect on December 1, 2016.

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