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News from EPI Restored overtime protections will benefit 12.5 million working people

The Department of Labor announced its final overtime rule today, which guarantees that anyone who is paid less than $47,476 a year must be paid time-and-a-half for any hours they work over 40 in a week. The updated rule will directly benefit 12.5 million workers, according to a new EPI analysis—extending overtime eligibility to 4.9 million workers and making it easier for another 7.6 million workers who were already eligible for overtime to prove their eligibility.

The 12.5 million workers who will be affected are middle class workers, earning between $23,660 and $47,476. It includes 1.5 million blacks and 2 million Hispanics. 51 percent (6.4 million) of the affected workers are women and 4.2 million are parents.

“The new salary threshold will provide millions of workers with higher wages or more time with their families. It will also give hourly and part-time workers the opportunity to pick up work that might have otherwise been done during overtime by their full-time, salaried colleagues,” said EPI Vice President Ross Eisenbrey. “It’s exciting to see government working for working people and their families. Congratulations to President Obama, Secretary Perez, and the Department of Labor and its own hard-working employees, for a job well done.”

Raising the threshold will affect workers in all states, including more than 25 percent of salaried workers in West Virginia (30.7 percent), Arkansas (30.6 percent), South Carolina (30.3 percent), Florida (29.3 percent), Tennessee (29.2 percent), Idaho (29.1 percent), Georgia (28.2 percent), South Dakota (28.2 percent), Delaware (27.7 percent), North Dakota (27.5 percent), and Nevada (26.9%).

Of the major industries, the new threshold will benefit the greatest share of salaried workers in agriculture, forestry, fishing, and hunting (39.7 percent), leisure and hospitality (37.3 percent), other services (33.2 percent), construction (32.6 percent), public administration (32.5 percent), and wholesale and retail trade (31.2 percent).

“A combination of some employers misunderstanding the rules and the willingness of others to push the limits of the law led to widespread noncompliance with the overtime rules,” said EPI economic analyst Will Kimball. “Coupled with the fact that the threshold was eroded by inflation, this meant millions of workers lost their right to get paid for all the hours they work. The updated rule will restore this right.”

A previously released EPI issue brief catalogs the various changes that have eroded overtime eligibility since the late 1990s, including changes in the law implemented by the Bush administration in 2004, various court decisions, and the behavior of employers to limit the ability of workers to earn overtime pay. The methodological account of these estimates can be found in Estimating the Number of Workers Directly Benefiting from the Proposed Increase in the Overtime Salary Threshold.