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New Federal Overtime Rule Takes Effect Jan. 1


Which workers should get paid extra for working long hours? That question is at the heart of a new overtime rule from the Trump administration. More workers now qualify for overtime, although far fewer workers will qualify than under a rule that was proposed under President Obama. NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: The number of workers now eligible for overtime pay is growing by 1.3 million people. That's because the Labor Department is changing the threshold for the kind of salary a worker has to make to qualify. Here's former Labor Department chief economist Heidi Shierholz.

HEIDI SHIERHOLZ: There is just a broad rule that, generally, people who work more than 40 hours in a week in this country are eligible for overtime pay. And this one is about who's exempted from those protections.

SELYUKH: People who get paid by the hour already have overtime pay guarantees, so this rule is for salaried workers. And the idea behind it was that people who are, say, bona fide managers or supervisors don't need overtime pay protections. Here's Paul Sonn with the worker advocacy group National Employment Law Project.

PAUL SONN: The overtime rules are a lot like a minimum wage for the middle class. They make sure workers have time for their personal lives by protecting the 40-hour workweek. And you know, there was an exemption for highly paid managers and professionals who are - you know, the assumption was they had the bargaining power to negotiate their own pay and work schedules.

SELYUKH: Except the salary level has eroded over the decades, so people making as little as $24,000 a year until today could have been denied overtime pay. Think fast food or retail managers. The new Trump rule gives that threshold a boost up to nearly $36,000, which, Shierholz says, mainly affects those lower-paid frontline managers. She says before today, about 6% of full-time salaried workers were eligible.

SHIERHOLZ: The Trump administration's rule raises it to just around 15%.

SELYUKH: Shierholz had worked in the Obama administration on another rule that would have, by now, extended overtime pay to more than twice as many workers. She says by today, it would have guaranteed overtime pay for managers making as much as $51,000 a year. But that rule was challenged by the business community and blocked by a federal judge in Texas. The Trump administration chose not to defend it but wrote its own version. Here's Marc Freedman, vice president for workplace policy at the U.S. Chamber of Commerce.

MARC FREEDMAN: We think that a more narrow, a more refined salary threshold was in order, and that's what this administration has put in place.

SELYUKH: Besides, Freedman says, many businesses did adjust to the Obama-era rule - for example, changing schedules, reshuffling duties or raising the salary for lower-paid managers to keep them exempt from overtime pay. And so, he says, a lot of employers are already compliant with the new Trump administration rule.

FREEDMAN: A lot of the adjustments that might have had to happen would have already happened back in 2016.

SELYUKH: Meanwhile, Shierholz and Sonn argue the Trump rule is a missed opportunity.

SONN: While technically it's an increase, you know, in reality, it was a rollback, a token increase, that was aimed at blocking something more significant.

SELYUKH: And Sonn points out multiple states have already taken on overtime pay going beyond the new federal rule.

Alina Selyukh, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.