Obama’s Overtime Pay Overhaul to Have Big Impact on Women, People of Color

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Obama’s Overtime Pay Overhaul to Have Big Impact on Women, People of Color

Jessica Mason Pieklo

The proposed rule would boost the overtime exemption from $23,660 a year to $50,440 a year.

The Department of Labor announced a rule Tuesday the Obama administration claims will extend overtime protections to nearly five million employees within the first year of implementation. The rule change could have an outsized impact on women and people of color.

The revised rule would raise the threshold under which most salaried workers are guaranteed overtime. Under current regulations, only salaried workers who make $455 a week, or $23,660 a year, qualify for overtime pay when they work more than 40 hours a week, and only if their job duties are not professional, executive, or administrative.

The Department of Labor estimates the overtime protections will affect women and people of color the most. About 56 percent of the affected workers are women, 53 percent of whom have at least a college degree, according to the federal government.

Salaried workers who earn below that threshold and who are not considered “white collar” must be paid time-and-a-half for each hour worked beyond 40 hours a week.

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That threshold would be raised to a projected level of $970 a week, or $50,440 a year, in 2016, under the Obama administration’s proposal. The proposal also seeks to update the manner in which “white collar” employees are exempt from overtime rules. That update is designed to address the problem of employers like Walmart misclassifying employees in order to avoid paying workers overtime wages.

The Obama administration’s order comes as the national fight for a $15-an-hour minimum wage ramps up. Seattle, which is on the front lines of the wage fight, has seen employment increase since policymakers there implemented a $15 hourly minimum wage. This stands in contrast to lawmakers who have steadfastly opposed any wage increases for fear of hampering employment rates.

Corporations spend about 91 percent of their earnings on stock buybacks and dividends, according to the Economic Policy Institute (EPI). This boosts CEO compensation and contributes to wage stagnation, per EPI analysts.