Who Benefits from the New Overtime Rule?

Who Benefits from the New Overtime Rule?

The following is taken from the Official US DOL Blog dated 5/18/16

Today, the Department of Labor issued a new rule that updates the regulations determining which white-collar, salaried employees are entitled to the Fair Labor Standards Act’s minimum wage and overtime pay protections.

The rule increases the salary threshold below which most white-collar, salaried workers are entitled to overtime from the current $455 per week (or $23,660 for a full-year worker) to $913 per week (or $47,476 for a full-year worker).

The effective date of the final Overtime Rule is December 1, 2016.

DOL Overtime Map

The updates will impact 4.2 million workers who will either gain new overtime protections or get a raise to the new salary threshold. So who are these workers?

More than half − 56 percent − are women, which translates into 2.4 million women either gaining overtime protections or getting a raise to the new threshold as a result of the rule. We also find that more than half – 53 percent − of affected workers have at least a four-year college degree, and more than 3 in 5 (61 percent) are age 35 or older. And 1.5 million are parents of children under 18, which translates into 2.5 million children seeing at least one parent gain overtime protections or get a raise to the new threshold.

To get a deeper understanding, it’s also helpful to look at the group that affected workers come from – those currently exempt from overtime (that is, white-collar workers who were not entitled to overtime pay before this rule change). Workers currently exempt are those who are paid on a salary basis, earn at least $455 per week, and are employed in a bona fide executive, administrative or professional capacity (definitions of these categories used in the regulation can be found here). The first column in the table below shows the demographic breakdown of white-collar, salaried workers who are currently exempt from overtime protections.

Overtime Chart DOL Details

The next two columns show the number and share, respectively, of workers currently exempt from overtime who earn below the new salary threshold. These are the currently exempt white-collar workers at the low end of the pay scale who will gain new overtime protections or get a raise to the new salary threshold when the rule is implemented.

We find that currently exempt women are more likely to earn low salaries than their male counterparts, which means that a higher share of them are affected by the rule; more than a quarter (26 percent) of currently exempt women will be affected, compared to just 14 percent for men.

Other groups where a high share of currently exempt workers gain overtime protections or get a raise to the new threshold are workers without a college degree (30 percent), workers under age 35 (29 percent), Hispanics (28 percent), and black non-Hispanics (28 percent).

While the data show that some groups are more affected by the rule than others, they also show that workers who will benefit from the rule can be found across the board. This long-awaited update means that millions of workers from all walks of life will either gain new overtime protections or see a raise to the new salary threshold.

Fact sheets and other materials to help employers and workers understand how the rule will affect them and the broader economy are available dol.gov/overtime.

*Excludes exempt workers who are not potentially affected by the rule because, for example, they are eligible for another overtime exemption. **Includes Native Americans, Alaska Natives, Native Hawaiians and Pacific Islanders, and those who report more than one race.

You Might Also Want To Read the Following Articles on the New Overtime Rule from DOL:

  1. Plenty of Options with New Overtime Rule
  2. Nonprofits and the Proposed Overtime Rule
  3. Everything You Need to Know About Updating Overtime Pay

FosterThomas HR is here to help. Please let us know how we can assist you with this new ruling.

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