The Econ-versation: Labor Department extends eligibility for overtime pay

Silvia Buonocore, Senior Writer

On Sept. 24, the U.S. Department of Labor announced a new rule to extend eligibility for overtime pay for the first time since 2004. To do so, the Labor Department plans to increase the salary threshold; workers earning a salary below the specified salary threshold are eligible for overtime pay.

The current threshold of $23,660, which was set during the Bush Administration, will now be raised to $35,568. The increase of this threshold makes approximately 1.3 million more workers eligible for time-and-a-half pay for working over 40 hours a week.

The new rule, scheduled to be set in motion on Jan. 1, 2020, gained support because it gives more workers stability and the means to earn more money for extra work they clock in.

In 2016, during the Obama Administration, there was an attempt to raise the threshold to $47,476, which would have extended eligibility to an additional four million workers. This rule also included adjustments for inflation every four years. However, a judge prevented this increase from ever taking effect.

Some believe that the current change is a step down from the previously proposed threshold increase, while others argue that too high of an increase could harm businesses, as it will cause them to spend large amounts of money on overtime pay. On the other hand, too low of an increase leaves out many workers who some believe should be eligible for overtime pay.

The new rule does not include yearly updates to adjust for inflation, which will hopefully inspire the government to update the threshold on a more regular basis.

Data from The Wall Street Journal and The New York Times.

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