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A New Rule Could Make You Eligible For Overtime Pay

Kerry Close
Though it could also result in some employers cutting pay or hours.

If you’re a salaried worker making under $47,000 a year, you could be in luck: A new rule could make you eligible for overtime pay.

The new rule, expected to be passed by the Labor Department as early as this week, would make some management, administrative and professional employees eligible for overtime pay when they work more than 40 hours a week, USA Today reported. Currently, such workers who earn more than $26,660 a year are exempt from getting overtime, but a new rule proposed by the department last summer would raise that threshold to $50,400.

However, some legal experts say the final version of the regulation likely places the threshold closer to a salary of $47,000—meaning that 5 million salaried workers are expected to be eligible for overtime under the rule. The change would most directly affect the service industry, particularly workers in hotels and restaurants, Gary Chaison, a professor of labor relations at Clarkson University, told Marketplace.

“It represents a significant step forward in the effort to boost wages for working people,” Ross Eisenbrey, vice president of the Economic Policy Institute, told USA Today.

Indeed, there could be a raise on the horizon for the approximately 1.2 million Americans that the Labor Department estimates will receive increased wages or a higher base salary as a result of the rule change. However, the bad news is a large number of small businesses are expected to instruct their employees to work no more than 40 hours a week because they can’t handle the additional costs.

To account for the productivity loss, these companies will likely hire part-time workers or cut the base pay of affected employees. Others will switch salaried workers to hourly employees and ask them to track their hours, according to the National Federation of Independent Business.