Commentary

The Obama administration just helped out 425,000 working North Carolinians

A statement from the Justice Center summarizes:

In a huge win for workers, new federal overtime rule raises wages for 156,000 salaried North Carolinians
New USDOL rules raises overtime threshold from $23,660 to $47,476, covers 425,000 workers

The U.S. Department of Labor released long-awaited rules today that will allow 425,000 salaried workers in North Carolina to qualify for overtime pay. The new rule will raise wages for 156,000 workers and play an important role in helping build an economy that works for all.

In 2014, President Obama directed the Secretary of Labor to update the overtime regulations to reflect the original intent of the Fair Labor Standards Act, and to simplify and modernize the rules so they’re easier for workers and businesses to understand and apply. The department has issued a final rule that will put more money in the pockets of middle class workers – or give them more free time.

Specifically, the final rule will:

  • Raise the salary threshold for overtime eligibility from $23,660 to $47,476 per year. This will extend overtime protections to 156,000 new salaried workers, bringing the total number of covered workers to 425,000 salaried workers in North Carolina, or about 26 percent of the state’s total salaried workforce.
  • Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability and giving businesses time to adjust their payrolls.
  • Provide greater clarity for workers and employers.
  • The final rule will become effective on December 1, 2016, giving employers more than six months to prepare. The final rule does not make any changes to the duties test for executive, administrative and professional employees.

The change will also provide a boost to the state economy. This is also from the Justice Center summary:

Allowing more salaried workers to receive overtime will boost the state’s economy and provide a critical antidote to ongoing middle class wage stagnation. Here are some of the economic benefits for the new rule:

  • Creates more economy boosting jobs. More than half of the jobs created since the recession don’t pay enough to make ends meet, so access to overtime pay allows more workers—especially those at the bottom of the salary scale—to afford the basics, like buying groceries, paying rent, putting gas in the car, and children in day care. Because lower-wage workers are more likely to spend their new earnings than save them, this will give an immediate boost to business sales, profits, and ultimately job creation.
  • Rewards workers for improving productivity. Business productivity has almost doubled in North Carolina since 1978, while wages have grown by just 22 percent. The Brookings Institute reports that the overwhelming majority of these productivity gains have gone to executive compensation, investor income, and stock buy-backs designed to artificially boost a company’s stock price, rather than to workers’ wages. The new rule allows salaried workers to benefit from the hours they work beyond a normal 40-hour week.

The Economic Policy Institute has more details on the new rules that you can check out by clicking here.

 

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