A recent update of overtime rules and regulations by the US Labor Department will mean that at least 4 million US workers who were previously ineligible will now be eligible for overtime pay.
When the updated regulations go into effect on December 1, salaried employees whose annual pay is $47,476 will be paid time and a half when they work more than 40 hours in a week.
Before the overtime regulations were updated, salaried employees had to have annual salaries of $23,600 or less to be eligible for overtime pay.
According to the Labor Department, more than 4 million more US workers will now be eligible; however, the Economic Policy Institute (EPI) says that as many as 12 million people could be affected.
“(The) new overtime protections mark a major victory for working people that will improve the lives of millions of families across America,” said Richard Trumka, president of the AFL_CIO. “We applaud the Obama Administration heeding the call for action to ensure working people get paid for all the hours we work.”
For years now, the AFL-CIO through its America Needs a Raise campaign has been urging federal, state, and local officials to implement policies that raise workers’ wages.
That effort gained momentum when tens of thousands of workers took to the streets to demand a minimum wage increase to $15 an hour.
That grassroots effort led cities such as Seattle, San Francisco, Los Angles and the states of California and New York to adopt labor standards that raised the minimum wage to $15 an hour over the next five years.
The new overtime rule, which the AFL-CIO urged the Obama Administration to adopt as early as 2012, is another government action that will raise wages for workers who most desperately need a raise.
Overtime laws were enacted nearly 80 years ago to ensure that workers were fairly compensated when they worked longer than the standard work week–40 hours.
But like many other laws that are supposed to protect workers, overtime laws over the last 40 years have been weakened.
In 1975 more than 60 percent of salaried workers were covered by overtime laws. Today just 7 percent are.
Among those who will now be eligible for overtime pay are 1.6 million workers in the nation’s retail and grocery stores, where many low-paid employers are classified as management even though, they perform worker duties such as stocking shelves and working cash registers.
“It is not uncommon to see managers (in grocery and retail stores) work 50 to 60 hours per week with no extra pay,” said Marc Perrone, president of the United Food and Commercial Workers. “By increasing the overtime threshold we begin to put an end to this unfair practice and see more hours given to people who really want them.”
Salaried workers in the retail industry aren’t the only ones who benefit from the updated regulations.
Postdoctoral research employees at the nation’s universities will now be eligible for overtime pay.
Dennis Williams, president of the United Autoworkers, which represents postdoctoral researchers at some universities said that these professional employees are “underpaid and regularly work more than 40 hours a week.”
“The new threshold will enable many to pay for basic necessities like child care and rent,” said Williams.
Williams also called on the Labor Department to expand coverage “to all academic employees and other workers who are unfairly denied overtime pay.”
EPI reports that the updated rules will benefit a broad range of workers and their family members including, 6.4 million women, 4.2 million parents and 7.3 million children (under age 18), 1.5 million African Americans, 2.0 million Latinos, 3.6 million workers age 25 to 34, 4.5 million millennial, and 3.2 million workers with a high school degree but not more education.
In addition to helping millions of workers, the expansion of overtime coverage will boost the economy that has yet to find solid footing eight years after the end of the Great Recession.
The Wall Street Journal reports that wage stagnation is one of the main reasons that economic growth has been sluggish.
“The U.S. economy, like much of the globe, is stuck in a slow-growth rut. Turmoil overseas and still-weak commodity prices are preventing the manufacturing, trade and energy sectors from supporting growth. That leaves US consumers to boost the expansion. But without accelerating wages, it’s difficult for them to step up spending,” writes Eric Morath in the Journal.
According to the AFL-CIO, expanding overtime coverage will increase take home for people who will spend it and help the economy grow.
“Increasing the salary threshold would increase the take-home pay for workers who become eligible for overtime pay for their extra hours, allowing them to purchase goods and services. Updating the overtime rule would grow the economy much the same way increasing the minimum wage would,” writes Brendan Duke of the Center for American Progress.
Increasing the number of people eligible for overtime is also a step toward reversing the growth of inequality.
“Taking this step to restore overtime is one of the many ways we are beginning to change the rules of our economy that are rigged in favor of Wall Street,” said Trumka. “The fight for even stronger overtime protections and to raise wages for all working people continues.”