Threshold for Overtime Pay is Raised to Include 1.3 Million More Americans


An additional 1.3 million Americans are set to qualify for overtime pay under a retooled Labor Department regulation.

On Jan. 1, 2020, the salary threshold below which workers generally qualify for time-and-a-half overtime pay will increase from $23,660 to $35,568.

“America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans,” acting Labor Secretary Patrick Pizzella said.

The rule would boost the salary threshold to $684 per week. Retail-clothing employees made an average $485 per week in July, and restaurant workers earned an average $387 per week. The threshold could also affect home health-care workers, who had average weekly earnings of $579.

Many U. S. businesses pay overtime to hourly workers but often exempt managers and other salaried employees from additional pay when they work more than 40 hours a week. The Labor Department sets a salary threshold to regulate those making smaller amount from getting classified in a way that is unfair.

Tam Kennedy, owner of Taco John’s in Minnesota and central Iowa, said “That is more of a standard amount that you would expect to have to honor an overtime obligation than what had been proposed by the previous administration.”

Under the Obama administration’s proposal, Taco John’s would have had to overhaul employee handbooks and convert a salaried general manager to an hourly rate to cap costs.

“We probably would have lost that manager because they did not want to be taking a step backwards in being paid by the hour,” she said.

Critics of the new move, however, saw it as a step backwards.

“By weakening the overtime rule, President Trump is literally taking money from the pockets of workers to please corporate interests,” said Amit Narang, a regulatory policy advocate at Public Citizen.

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Economics, Finance and Investing