Jun 6, 2016
The Obama administration’s new overtime rule was finalized in May and will become effective on December 1, 2016. Under the new rule, everyone making less than $47,476 will automatically be eligible for overtime, regardless of their type of work. Previously, this rule was for those who made less than $23,660. The White House claims that an additional 4.2 million workers will become eligible for this overtime compensation.
But, it turns out that this claim will stay only on paper. First, about 60% of these newly eligible 4.2 million workers do not work overtime hours, and employers won’t change their pay because of the new rule.
The remaining 1.7 million workers would get a dismal raise, about $718 a year on average, according to the Los Angeles Times.
However, even this minuscule increase is doubtful. In the past, when such laws passed, businesses cut the base pay and/or hours to avoid paying overtime.
Republicans who opposed the new rule point this out. But none of them proposed a way to prevent businesses from cutting pay.
Obama’s overtime rule and Republican criticisms are both just election year talk from spin doctors.