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Obama Regulating A Tenuous Legacy With Overtime Rules


Bob Shire

Last month, the Obama Administration announced substantial reforms to the rules governing how U.S. workers are paid for overtime work. The new rules raise the income cap for those workers required to receive overtime payment working over 40 hours a week from $23,660, set in 2004, to $47,476. The new rule also, rather than simply setting a level which will need to be updated later, pegs the cap to the 40th percentile of full-time, salaried worker earnings in the lowest-wage Census region (a distinction currently held by the South). While the current four Census districts are likely too large and could use some revision, this peg adjusts the wage cap level to roughly match inflation, with sensitivity to lagging regions, every three years. The cap will not be higher for wealthier regions, but businesses in rural northern Alabama will not have to pay workers more because of soaring wages in San Francisco or New York City. The new rule takes effect December 1, 2016, which the Administration says gives businesses time to adjust and comply.


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