New overtime pay rule doubles salary threshold

President Barack Obama

By: Rebecca Turco

Additional reporting by The Associated Press


WASHINGTON, D.C. — More than 4 million U.S. workers will become newly eligible for overtime pay under rules issued Wednesday by the Obama administration.

The new rule is intended to boost earnings for middle- and lower-income workers. Some employers, though, might choose to reduce their employees’ additional hours.

Under the new rules, first released in draft form last summer, the annual salary threshold at which companies can deny overtime pay will be doubled from $23,660 to nearly $47,500.

In the fast food and retail industries in particular, many employees are deemed “managers,” work long hours, but are barely paid more than the people they supervise.

Some local businesses are thrilled with this new initiative. "Any opportunity to strengthen the middle class in this country is one that we can’t miss,” explained Asher Schofield, owner of the store Frog and Toad in Providence. “I think that having a strong middle class is good for business, period."

The Rhode Island Director of the National Federation of Independent Business, Bill Vernon, feels it will hurt small businesses’ bottom line: "There is no more money [to spend on overtime]. This doesn’t create more wealth for the company to spend on compensation and benefits."

The new rule goes into effect December 1, though theoretically the next president could act to undo it.

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