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Presidential Rule Change Raises Overtime Pay Threshold

In an effort to make good on his second-term promise to narrow the nation’s widening income gap and help bolster the fortunes of the struggling middle class, President Obama raised the threshold at which millions of hourly employees are eligible for overtime pay. So reports Business Insider.

That level – which was last increased by President Gerald Ford in 1975 – was created by the Depression-era Fair Labors Standards Act (FLSA) of 1938, and has long symbolized the need to pay Americans a fair living wage. The Act mandated that hourly employees working more than 40 hours per week were entitled to be paid time-and-a-half for hours above that amount.

Many employers easily get around that requirement by labeling full-time staffers who earn more than the threshold (currently $23,660 per year, or $455 per week) “managers” who are thus ineligible for overtime pay.

When President Ford raised the threshold to its current level (which is not indexed to inflation), it represented 1.57x the nation’s median wage and covered some 61% of all salaried workers. Today, only 8% of “non-exempt,” non-supervisory employees are guaranteed overtime pay.

The proposed increase would raise the overtime threshold to $50,440, or $970 per week – much closer to the $1,000/week rate that would raise it back to the 1.57 multiplier level.

A study by the non-profit Economic Policy Institute analyzing the proposed increase indicated it also would help some 12 million children in the U.S., by effectively raising wages for more than 6 million working mothers and fathers. The rule change, which, similar to a presidential Executive Order, doesn’t require Congressional approval and is expected to be implemented early in 2016.

Read the full article from Business Insider.

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