HR Compliance

Big News for Employers: Obama Proposes Expansion of Overtime

By

Lauren Owens

| Mar 14, 2014

The prospect of boosting wages can ruffle the feathers of businesses that believe such a hike would force them to cut jobs. Their theory may be put to the test, as President Barack Obama has issued a proposal to the U.S. Department of Labor to expand the eligibility requirements for overtime workers. This expansion would raise the minimum salary an employee must receive in order to qualify for overtime pay by more than double what it is today.

Currently, the salary threshold sits at $455 per week (almost $24,000 annually), but could rise to $984 per week (about $51,000 annually). While a lot of speculation surrounds the proposal, no official amount has been determined.

However, based on the most recent numbers, experts say this increase could extend overtime to more than 5 million employees currently ineligible. Jared Bernstein, former economic advisor to Vice President Joseph Biden, announced that officials were considering raising the threshold to anywhere between $550 to almost $1,000 per week.

While millions of salaried workers may welcome such a change, not everyone would be thrilled. In fact, some conservatives have warned Obama that when push comes to shove, not everyone will get their way. Translation: The threshold might rise, but in response, employers are likely to cut back pay or eliminate positions entirely.

Although no direct action has taken place yet, employers should be prepared for the change, if it takes effect in the near future.

About the Author

Lauren Owens

Lauren is an enthusiastic writer who is passionate about numerous topics surrounding the HCM industry including talent management and acquisition, technology, document management and leadership. Lauren is a former Paycom blogger, social strategist and community relations coordinator.

See more posts by Lauren Owens