A new rule will force businesses to pay more overtime and will be “enforced vigorously.”
The Obama administration announced new guidelines were set Tuesday that doubles the salary an employee must earn before employers can be exempt from paying overtime. The rule will be effective December 1, and will force businesses to extend overtime pay to 4.2 million additional workers.
The salary threshold before overtime can be waived is $47,500, up from $23,700.
Those opposing the rule say small businesses, especially, will not be able to afford the additional expense.
“Companies will have a choice to make: Either they pay their workers overtime or they cap the work week at 40 hours. Either way, the worker wins,” Vice President Joe Biden told reporters Tuesday.
Labor Secretary Tom Perez said the percentage of workers earning overtime is only 7 percent today, down for 62 percent in 1975. He said the administration will “enforce the new rule vigorously.” “We intend to pivot immediately into compliance assistance,” he said.
Critics say many businesses will be forced to cut employees’ hours and reduce pay in order to stay profitable. Trey Kovacs, a labor policy analyst with Competitive Enterprise Institute, said, “The overtime rule will mean many salaried workers on a management track will be downgraded to hourly status, with restrictive schedules and worse career prospects.”
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