This New Law Could be a Work-life Game-changer if It’s Passed

overtime law
At the height of the great Depression in 1938, President Roosevelt passed the federal overtime law, a rule that protected hourly workers and working people who earned below a certain salary from exploitation by making sure they received 1.5 times their hourly pay if they worked more than 40 hours per week. By the mid-1970s, this rule was strongly in effect, and the results were fulfilling the law’s original intention: roughly 60 percent of the workforce was compensated when they stayed late or worked on weekends. Meanwhile, highly paid white collar workers were exempt from this rule, since they typically made higher salaries and could be expected to stay late without hardship.

Overtime Pay Thresholds

But by the turn of the century, inflation had chipped away at a salary threshold that hadn’t been raised since 2004, when it stalled out at $23,660 per year. These days, only 8 percent of workers are covered by the rule, and the millions of salaried workers making as little as $25,000 or $30,000 per year can be pushed to work 50 hours per week or more with no additional pay.

New Overtime Rules

But hopefully, this is about to change. President Obama has proposed an increase in the overtime threshold to $54,400 per year, and this change is now under consideration by the Labor Department. If the law survives challenges in Congress and court, the new rule will likely take effect in 2016.

Who Stands to Benefit?

About five million workers in America are likely to be affected by this new law, most of them middle class, full-time employees with salaries that fall between the previous threshold and the new one. Many of these employees have been asked to stay on the clock for long hours, often covering for hourly employees entitled to overtime. When the annual salaries of these types of workers are divided by their real working hours, many of them are actually earning salaries far lower than the minimum wage.For these employees, this change could lead to a cascade of mental and physical health benefits. According to a recent study published in The Lancet, workers who stay on the job longer than 55 hours per week experience a 33 percent increase in their risk of stroke and a 13 percent increase in their risk of coronary artery disease. Long hours reduce time spent with family and bring on a host of illnesses associated with stress.But the law has yet to be passed, and its effects have yet to be determined; employers may respond to the change in any of several forms. They may cut back hours for these overworked employees, they may keep them on the clock and simply compensate them for their time, or they may shift their schedules and payroll structures to take on new staff at part time hours and rates. By some estimates, the law may lead to an increase in up to 117,000 new jobs.—In any case, the law bodes well for overworked, underpaid middle class American employees, and here at MyPerfectResume, we’re looking forward to the final outcome. Stay tuned for news and updates!