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Nearly one-third of salaried workers will be guaranteed overtime under the new rule, but that falls short of the half covered in the mid-1970s

The Department of Labor’s new overtime rule significantly increases the number of salaried workers who qualify for time-and-a-half pay for any hours they work beyond 40 in a week. Far too many salaried workers were not covered by prevailing overtime protections: While nearly half of all salaried workers were covered by the overtime threshold in 1975, that share fell to just 10 percent of salaried workers in 2014. This is because the salary threshold of $23,660 per year—the salary beneath which salaried workers are generally eligible for overtime protections regardless of duties— had not kept up with wage growth or inflation and was far too low.

Economic Snapshot

Nearly one-third of salaried workers will be guaranteed overtime under the new rule, but that falls short of the half covered in the mid-1970sShare of salaried workforce covered by the federal overtime salary threshold, 1975–2015





49.60%32.70%19801990200020100102030405060%
 

Note: The sample is limited to nonhourly wage and salary workers.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, various years

Raising the salary threshold from $23,660 to $47,476 will restore overtime rights to nearly one-third of salaried workers. Under the new rule, salaried employees making less than $47,476 a year must be paid overtime. The restored rule will benefit these workers in many ways—whether by getting paid time-and-a-half for all hours worked over 40 in a week, having their hours scaled back to 40 hours a week while still taking home the same pay, or getting a raise to put them above the salary threshold. This very positive move forward unfortunately does not restore the protections that were available in the mid-1970s when 49.6 percent of salaried workers had overtime protections, 16.6 percentage points greater than what the new rule covers.

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