Last week, President Barack Obama signed a presidential memorandum telling the Department of Labor to develop new overtime rules that would make more workers eligible for time-and-a-half overtime pay.  

The proposed rules would broaden the categories of workers who are eligible for overtime compensation.  They would also increase the salary threshold below which managers and supervisors are to be paid overtime pay.  Currently, salaried workers making less than $455 per week (or $23,660 per year) are eligible for overtime.  In short, the proposed rules would require employers to pay millions more workers overtime pay.

In announcing the proposed changes, Obama said, “Unfortunately, today millions of American aren’t getting the extra pay they deserve.” The final wording of the new rules will be determined by the Department of Labor.  First, the Department of Labor will hold hearings and obtain input from the business community, labor leaders, lobbyists, legislators and others before deciding on the final rules.

The overtime salary threshold was increased to $455 in 2004 under the administration of George W. Bush.  Before that, the last increase came in the mid-1970’s. “What we know right now is the threshold has been eroded by inflation, and there are 3.1 million people who, if the threshold had kept up just with inflation, would automatically be covered by overtime provisions,” said Betsey Stevenson of Obama’s Council of Economic Advisers.  g

— Kassem Dakhlallah is a senior partner with At Law Group, PLLC.  His practice focuses on complex litigation, including class actions, representative actions, commercial litigation, civil forfeiture and personal injury. He can be reached at (313) 406-7606 and kd@atlawgroup.com.