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More Workers Eligible for Overtime in the Future

On March 13, President Obama signed an order authorizing the Labor Department to examine ways to expand the number of workers eligible for overtime pay. According to the President, businesses are classifying too many employees as “professional” or “executive,” thereby excluding them from overtime pay. The President stated that “[m]illions of Americans aren’t getting the extra pay they deserve.” The order is part of the Administration’s effort to address the nation’s income gap; the President is also urging Congress to raise the federal minimum wage from $7.25 per hour to $10.10.

Overhauling the current rules could be a long and politically-charged process. In 2004, the Bush Administration increased the salary limit to qualify for overtime to $455 a week, following nearly two years’ worth of political maneuvering. The business community, including the U.S. Chamber of Commerce, has already expressed concern that making more workers eligible for overtime pay could lead to reduced staff or pay cuts. "Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive and will force employers to look for ways to cover these increased costs," said Marc Freedman, the executive director of Labor Law Policy at the U.S. Chamber of Commerce.

While change is likely on the horizon, employers should make sure that their current overtime policies are aligned with the law. For more information on the current overtime regulations, check back on Wednesday.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

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