Increase in those eligible for OT is coming

Posted: 10:35 PM, May 18, 2016
Updated: 2016-05-18 22:35:54-04

It's being called one of the most ambitious economic reforms of the Obama administration - the Labor Department announced today that overtime protection and pay will be extended to millions of additional salaried workers.

If you are an hourly employee, you know that working overtime means a bigger paycheck, but most salaried employees get paid the same amount no matter how many hours they work.

That's about to change for millions and a Detroit employment & labor lawyer says, it's about time.

"I think it's super! It means more money in working people's pockets!" says Bruce A. Miller, Employment Law Attorney at Miller Cohen.

Under current federal law, salaried employees making $23,660 and less, are to be paid 'time and a half' for every hour worked over 40 in a week. 

The Department of Labor announced today that overtime threshold will be raised to $47,476. Which means millions more salaried employees will now be eligible for overtime pay.

"Having worked for companies and been the salaried employee that's working 60, 70, 80 hours a week, I can fully understand. And now I'm on the other side," says Donna Barnett owner of Ruth Divine Events a corporate event planning company in downtown Detroit.

Now that she's a business owner, Barnett says she has to think about what that new law will cost her.

"When you go to hire people, you have to consider that now. So how many people can I now afford to hire?" she says.

"As the person that's worked 70/80 hours a week and you do the math, and you're making minimum wage - that's not fair either," she adds.

The overtime rule was initially established during the Great Depression to ensure people were paid for the hours they work.  In recent decades salaries have risen and the number of workers eligible for overtime pay has plummeted from 62% in 1975 to just 7% now. That's according to White House estimates.

The Department of Labor  says when the new rule goes into effect, wages will be increased more than a billion dollars annually and there are plans to update the overtime threshold every three years to make sure it keeps pace with inflation. Which is a big win for middle class workers says attorney Bruce A. Miller.

"Now we just have to make sure the employers pay it. And that means that the law has to be enforced and I look forward to making my contribution," says Miller.

Miller says some businesses may try to get out of paying overtime by raising employee salaries above the threshold, but he says that's a win for employees too.

"I think when you take good care of your employees then they take good care of your clients and it trickles down - I think that's the way it should be," says Barnett.

The new rule goes in to effect December 1st