Overtime pay plan for 4 million US workers

Washington

The move marks one of the administration’s most significant moves to address stagnant wages. The rule, which has drawn intense criticism from business groups and Republicans, doubles the maximum annual income a salaried worker can earn and still be automatically eligible for overtime pay from 23,660 dollars to 47,476 dollars and requires that threshold to be updated every three years. It takes effect December 1.

The Obama administration and supporters of the new rule say the 23,660 dollars threshold allowed companies to hold down labour costs by requiring workers with relatively low incomes to work well over 40 hours per week without additional pay.

Officials said many workers will earn more money, an estimated total of 12 billion dollars over the next decade, while others will work fewer hours for the same pay. “More than 4 million workers are either going to be paid more or get time back to raise their family, go to school  or retrain to get a better job,” Vice President Joe Biden said during a phone call with reporters.

The rule will likely touch nearly every sector of the US economy but is expected to have the greatest impact on non-profit groups, retail companies, hotels and restaurants, which have many management workers whose salaries are below the new threshold.

Business groups, which lobbied heavily against the changes, say companies will be forced to cut wages and hours and may slow hiring.

The rule will likely face legal challenges, including claims that the US Labor Department flouted legal requirements for creating new regulations. Republicans in Congress have said they will move to block the rule, but they would need to overcome a veto from President Barack Obama.