If you work in the food service industry, you’re about to get a little more money in that paycheck!
Overtime pay has become a staple for many that do wage work. But for everyone else, overtime pay is an alien concept. The fact of getting paid more for working over 40 hours-per-week is something very few in the US can relate to. The Obama administration however looks to change that!
So with “Taking Care of Business” on blast, President Barack Obama announced last week that effective December 1st, new rules would expand the number of individuals that get over time pay, specifically those that are salary workers. So what are the specifics? Well, let’s take a look!
Point 1: In understanding how overtime pay protections work in the US, you first have to look at the Fair Labor Standards Act of 1938 (FLSA). The landmark law originally created protections for workers in which US companies could establish minimum wage and overtime pay.
Point 2: Even though the standards set by the FLSA were put in place to benefit workers at the time, the law itself never really kept pace with economic trends – particularly regarding inflation and corporate profits – which lead to the current standards in overtime pay and minimum wage being inadequate with today’s economic landscape.
Point 3: The original FLSA rules only allowed those who made under $23,660-a-year to be eligible for overtime pay. That means over 90% of the US population wasn’t eligible for overtime pay!!
Point 4: The new rules introduced last week by the Obama administration tries to modernize one aspect of the FLSA; the expansion of eligibility for overtime pay. With the new rules, the Department of Labor expects around 4.2 million people will be eligible for overtime benefits.
Point 5: The new overtime rules are targeted at salaried workers to have them be eligible for overtime pay, specifically those that are at the bottom 40% of the group. This is actually a huge boon for those working at the bottom end of the labor market, particularly those working in the food service industry. In other words, you’re working 40 hours-a-week; the Obama administration would like see more money being put in your paychecks.
Point 6: While President Obama’s new overtime rules are less ambitious than say some of the other economic reforms being touted by liberal Democrats, they still however create a fundamental difference in how Democrats and Republicans view direct regulatory intervention.
Point 7: Generally speaking, many Democrats in the past have been wary about creating laws which would directly impact how businesses operate. For example, the Clinton administration in the 90’s created new regulatory standards in areas like the environment, the healthcare system, and in redistribution of taxes. Yet President Clinton gained a reputation of being a “pro-business Democrat” by being relatively lax on regulations that directly impacted how businesses operate in the US.
Point 8: Over the past few years however, Democrats have started to support more direct regulations on businesses. Specifically the recent push for increasing the minimum wage (The Fight for $15 Movement) has been one of the major examples in showing the change in Democrats’ mindset of being more comfortable in pushing for direct regulatory reform on businesses. President Obama’s new overtime rules also show to highlight that willingness to change.
Point 9: As you would have guessed, Republicans aren’t too happy with the Obama administration’s new overtime rules. Critics like House Speaker Paul Ryan say the rules only hurt those it’s trying to protect, and worry that many small business would be unable to afford skilled workers thanks to the potential costs.
Point 10: These new overtime rules have the potential of being a stepping stone in increasing the minimum wage. While the minimum wage increase has been a major talking point that many Democrats have pushed for in the past decade, we shouldn’t take the Obama administration’s new rules as light legislation. Considering more than 4 million individuals are now eligible for overtime pay in the US, whether you agree with the rules or not, it’s hard to argue that they aren’t effective.
(Photo Credits: Pixabay.com, FightFor15’s Twitter, Google Images)