The overtime proposal

There’s a proposal for the federal government to change the rules on who is required to receive overtime pay for working above a certain number of hours. NC State University economist Mike Walden explains the proposal and its potential impact.

“Right now the federal government says if you make less than $23,600 a year, you are subject to the overtime rule. In other words, if you work more than 40 hours, you have to get overtime. What the new rule would propose is to virtually double that. If you make less $50,440 a year, you would be subject to the overtime rule — really your employer, meaning if you worked over 40 hours a week, you have to be paid overtime.

“This would be a big change. This would affect somewhere …, the estimates vary, between 5 and 15 million workers. The baseline — the $23,660 that we currently have — has not been adjusted for inflation over time. That’s one reason why some say we need this proposal. The new rule would say that that number would be adjusted for inflation, so the $50,440 would go up over time, based on inflation.

“Now obviously if you work a lot of overtime and you would be subject to this new rule, you would applaud this, and so many workers would potentially see an increase in their pay.

“A lot of people in the business community say, ‘Well, wait a minute now. This is going to affect our bottomline. We already work on small margins. What we are going to do — maybe not initially, but over the long run — is look for ways to make sure someone doesn’t go into the overtime area, maybe hire two people to do the job of one or maybe look for more opportunities to automate.’

“So we will have to monitor this over time to see if the net effect is really a plus or minus for workers, but this is likely a new rule that will go into effect very soon.”