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Overtime Pay Requirements Now Include More Workers

Posted by Jeff Pelliccio on Nov 18, 2019 9:00:00 AM

In ICS insights, hiring trends, Candidate

The number of people eligible to receive overtime has increased due to a new rule set by the Trump administration.

The law, which will take effect starting January 1, 2020, will increase the salary threshold for overtime from $26,600 to $35,568. This marks the first increase since 2004 after a 2016 regulation posed by the Obama administration was blocked.

Meanwhile, some states moving at a much faster rate than federally required have already surpassed the threshold. In California, for example, workers earning below $49,920 are eligible for overtimea threshold that's foreseen to increase again to $62,400 by 2023.

The Shift in Overtime Pay Requirements

Currently, businesses pay overtime to hourly workers, while salaried employees and those in management positions are typically exempt. The Labor Department sets the salary threshold, and under the new rule, most of the workers below the threshold must be paid overtime, no matter the job position.

Federally, around 1.2 million workers will be eligible for overtime as a result of the new pay requirements. Additionally, 100,000 individuals in supervisory or management positions will likely see an increase in their income as they become included in the new overtime rule. Once implemented, the rule will not be adjusted after a given period.

The move to increase overtime requirements just came years after a 2016 Obama administration version of the law was shut down. This version of the rule included a plan to increase the overtime threshold to $47,476, impacting over 4 million workers across various industries. This rule previously proposed covers revisiting and adjusting the threshold every three years.

Now, acting Labor Secretary Patrick Pizzella has said that the Trump Administration's new overtime rule can help put more money into the pockets of over a million Americans. The plan seeks to significantly impact those in higher education, retail, non-profit, fast food service, and home healthcare industries, increasing the salary threshold from $455 to $684 weekly. This improves how workers are paid, as the data collected in July 2019 revealed that those in the retail industry only make $485 per week, those in restaurants make $387 weekly, and those in home health care make $579 each week. 

Making Way for More Labor Department Changes

The new overtime requirement rule was completed the same day as the Senate HELP committee voted in favor of Eugene Scalia to fill the newly vacant labor secretary position.

The labor department is also preparing to make a ruling as to whether or not an employee can work for two separate companies. The motion is seen to help lessen the liability for those businesses that employ contractors.

These changes, as well as the new overtime pay requirement, are part of a series of updates that will be implemented by the White House as they work on the complete regulatory changes after previous labor secretary Alexander Acosta's resignation.

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