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New OT ruling: 6 fast facts

Supporters, critics differ on measure's impact

More than 4 million Americans stand to receive a “bonus” starting late this year.

That is how many workers could be eligible for overtime under federal regulations finalized this week.

The rule, published by the U.S. Department of Labor, raises the annual salary level, from $23,660 to $47,476, for which workers must be paid overtime if they log more than 40 hours in a week.

Supporters predict the move will create hundreds of thousands of jobs, extend overtime protections to millions of workers, reduce excessive hours of unpaid work by underpaid employees, and increase salaries for employees earning near the new threshold, according to reports.

Critics, however, contend that the move could backfire and hurt workers, in addition to creating paperwork and scheduling nightmares. Employers could try to avoid the extra costs by converting salaried workers to hourly, reports said.

The move is the first time the threshold has been increased since 2004, according to Michael King, an employment attorney at Stock and Leader in York.

“That’s the driving force here, at least as far as the Obama Administration is concerned, that the number had not changed for a number of years,” he said Thursday.

“It’s hard to argue that $23,660 in 2004 is (worth) the same as $23,660 is in 2016,” he said.

King said he expects “the biggest impact is likely to be retail, general retail, but in particular the restaurants, the fast-food segment.”

6 quick facts about the new regulations

1. The measure takes effect Dec. 1.

2. Under the old rule, employees making as little as $23,660 a year could be classified by their employer as professionals, administrators, or executives – an assistant manager at a fast-food restaurant is the most common example. They often would work 60 or more hours and get paid for 40. Now, only employees earning at least $913 per week, or $47,476 a year, can be denied overtime pay, officials explained.

3. The new $47,476 threshold is some $3,000 lower than the amount in a preliminary version of the rule.

4. King said the Labor Department expects the new regulations to make overtime available to 4.2 million workers who do not have it available to them now, but other estimates predict a higher number.

5. Employers can still avoid paying for overtime if the employee earns at least $47,476, the Economic Policy Institute said. Under the new rule, it could cost an employer less to pay a salary at or above the threshold and then assign 20 hours of “free” overtime than it would be to pay a salary below the threshold and then pay the 20 extra hours at time-and-a-half.

“In other words, employers could respond to the new rule by raising the salaries of employees earning near the new threshold,” the institute said.

6. But the National Retail Foundation predicted that some workers newly eligible for overtime pay could see their base wage reduced, resulting in no overall income gain.

David O'Connor
Dave O'Connor covers York County, manufacturing, higher education, nonprofits, and workforce development. Have a tip or question for him? Email him at [email protected].

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