U.S. Rep. Rosa Delauro and Gov. Dannel P. Malloy welcomed the U.S. Department of Labor ruling that could increase overtime pay for more than 45,000 Connecticut workers.
The U.S. Department of Labor doubled the salary threshold for receiving overtime pay and plans to update the threshold every three years to keep pace with inflation. Workers will now automatically qualify for overtime if they make up to $47,476 a year, or $913 a week. The previous threshold was $23,660 or $455 a week. (Hourly employees usually qualify for overtime automatically)
“The Labor Department’s final overtime rule is welcome news for the millions of American workers who are working longer hours, yet are still struggling to get by,” DeLauro said. “With this rule, the administration is taking another strong step forward to lift up America’s working families and give them a fair shot in the workplace.”
Overtime rules set out by the Fair Labor Standards Act were last amended in the 1970s, when about 60 percent of the workforce qualified for overtime pay. Today, only seven percent of workers qualify, although over half of full-time workers have reported putting in more than 40 hours per week.
While hourly employees qualify automatically for “time and a half” pay on hours worked beyond the typical 40 a week, salaried workers making above the DOL threshold are not entitled to higher overtime pay, no matter how many hours they work.
The Department of Labor estimates that the changes will affect 4.2 million workers nationwide and raise wages $12 billion over the next ten years. Women will account for 55 percent of affected workers and about two thirds of workers will hold bachelor’s degrees or have some college experience. In Connecticut, 1.4 percent of all workers, or 46,321 people according to the DOL, could begin receiving overtime pay.
Hartford, New Haven, New Britain, Windham, Bridgeport, New London and North Canaan are likely to be the most affected by the ruling. All have median household incomes within the new overtime qualifying range.
Workers making more than the $47,000 threshold can still qualify for overtime pay, but they have to demonstrate that they perform mostly executive, administrative or professional duties. These criteria were not amended due to concerns that it would be difficult for businesses to implement a new test.
The DOL also increased the threshold for “highly compensated employees” from $100,000 to $134,000. Above that income level, the process for employers to demonstrate that their employees are exempt from overtime pay is simpler. Employers will also be able to count bonuses and commissions toward up to 10 percent of the salary threshold for the first time.
“Now that the Administration has acted, Congress must go further to give American working families the resources they need to succeed,” DeLauro said. She cited enacting paid family and medical leave and expanding affordable childcare options as the next steps toward improving the lives of working families.
“It is a bedrock principle of our nation that workers and their families deserve a fair wage for their hard work,” Malloy said. “I commend President Obama, Vice President Biden, and Secretary Perez for modernizing overtime protections for the nation’s workers.”
The new rule will come into effect on on Dec. 1.