The U.S. Department of Labor on Wednesday began finalizing a rule that would make millions more Americans eligible for overtime pay.
The order states that any person earning less than $47,476 per year ($913 per week) who works more than 40 hours per week must receive overtime pay.
The Labor Department says the new rule will put more money into the hands of the middle class, or give them more free time:
"By increasing the number of workers who are eligible for overtime when they work more than 40 hours in a week, employers will have a choice. They can either increase their employees’ salaries to at least the new salary threshold, pay workers the overtime premium for extra hours, or limit their work to 40 hours in a week."
In an interview with NPR, Labor Secretary Tom Perez said middle-class jobs must pay middle-class wages.
"The angst that people feel across this country is so frequently the product of the fact that they're working hard and falling further behind," Perez said. "They feel like they lost leverage. And the reason they feel that is because in the case of the Fair Labor Standards Act, they indeed lost a lot of leverage."
Kentucky U.S. Senator Mitch McConnell released a statement criticizing the rule. He called it "another job-killing regulation" by the Obama administration:
“Our economy continues to be stuck in the worst recovery since World War II and the only solution the Obama Administration can come up with is more red tape that will hurt our nation’s working middle class. Just like Obamacare’s 30-hour work week, this regulation will once again incentivize employers to cut worker hours, provide fewer benefits, and hinder flexible work arrangements for hardworking Americans. That doesn’t help anyone get ahead. I’ve already heard from many concerned constituents in Kentucky on how this misguided regulation will hurt them."
McConnell said he is co-sponsoring legislation introduced by Senators Scott and Alexander that will require the Department of Labor to study the overtime rule and its effects on small businesses.
GLI, Louisville's chamber of commerce, also responded to the announcement of the new rule on Wednesday. In a statement, COO Sarah Davasher-Wisdom called the rule inflexible:
“While GLI is pleased to see a compromise on the wage level on the overtime rule unveiled today, the measure still makes the critical errors of limiting flexibility, ignoring regional distinctions in compensation, and demanding full implementation by December 1 st rather than a phased approach. GLI continues to support Congressional efforts to reverse the rule or offset its negative effects on business, specifically, Majority Leader McConnell’s proposal to allow workers to opt for paid time off as opposed to overtime pay."
Employers have a little more than six months to prepare, as the rule will take effect on Dec. 1, 2016. A copy of the final rule can be found here.
