Capitol Hill

Open your checkbook
You may have to pay some employees more under DOL's new overtime rule

The Department of Labor (DOL) finalized its rule regarding overtime pay under the Fair Labor Standards Act. The rule and wage threshold had not been updated since 2004, and this is part of the Obama administration's efforts to increase middle-class wages. Although everyone would like to see wages increase, mandating such increases is worrisome. NRCA is concerned the new rule will add an additional paperwork burden and increase labor costs for employers while reducing workplace flexibility and pay for some workers.

The details

The new rule will go into effect Dec. 1 and more than double the current salary threshold of workers who are eligible for overtime compensation from $455 per week (or $23,660 per year) to $913 per week (or $47,476 per year). This is a slight reduction from the proposed wage threshold of $970 per week (or $50,440 per year) but still more than a 100 percent increase.

After the initial increase, the threshold will be updated every three years and tied to the 40th percentile of full-time salaried workers in the lowest-wage region of the U.S. (currently the Southeast). The proposed rule called for annual increases, so a three-year period is an improvement though the percentile is higher than the update from 2004, which used the 20th percentile.