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New overtime rules still leaving workers behind, says report

By Nisa Islam Muhammad -Staff Writer- | Last updated: Oct 15, 2019 - 8:00:17 PM

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WASHINGTON—The Department of Labor made 1.3 million American workers earning less than $35,568 eligible for overtime pay starting January 1, 2020, with a new rule under the Fair Labor Standards Act.

“For the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans,” acting U.S. Secretary of Labor Patrick Pizzella said. “This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”

Previously, only blue-collar workers and professionals who earned less than $23,000 a year could receive overtime pay under federal law meaning they get paid 50 percent extra when they work more than 40 hours in a week.

The final rule includes: raising the “standard salary level” from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker); raising the total annual compensation level for “highly compensated employees” from the currently enforced level of $100,000 to $107,432 per year.

The rule, however, falls far short of the Obama administration’s overtime rule, which would have extended overtime pay to workers earning up to $47,000 and accounted for future changes to wage growth. It leaves behind 8.2 million workers, costing them $1.4 billion per year in lost pay and scraps the cost of living increases.

In 2014 President Barack Obama wanted to include workers earning up to $47,000, and connect future changes to the cost of living because salaries were not keeping up with inflation.

“Since taking office, President Donald Trump has worked to roll back overtime protections for the middle class, thereby cutting their pay. With this rule, we now know the cost: Trump will cut workers’ pay by more than $1.4 billion per year, a number that will only grow with time. Regulations provide the rules of the road that shape how markets operate,” explained Sam Berger, vice president of Democracy and Government Reform at the Center for American Progress in a statement.

“The critical question is who writes those rules and who benefits from them. Under the Trump administration, the answer has been clear: The rules have been written by and for industry insiders and powerful corporations, and it is hardworking Americans who are paying the price.”

Mr. Obama’s proposition was met with great opposition by the business community. Businesses revolted and said they couldn’t pay that much in overtime pay.

Companies partnered with 21 Republican-controlled states to sue the administration before the rule went into effect in 2016. The rule was put on hold during the legal dispute and later invalidated in 2017 by a Texas federal judge who argued the Labor Department didn’t have the authority to make those changes.

Workers were upset and businesses were relieved. Labor Secretary Alexander Acosta stepped in and offered a much-diluted version of the Obama rule.

Richard Trumka, president of the AFL-CIO labor federation, is outraged. “Leaving behind more than 2.8 million workers who deserve a fair return on their hard work is disgraceful. Overtime is earned and should not be politicized. Lowering the threshold ignores the economic hardships faced by millions of working families,” he said in a statement.

“This disappointing announcement is part of a growing list of policies from the Trump administration aimed at undermining the economic stability of America’s working people,” he added.

“The labor movement will continue fighting to change a rigged system that for decades has favored the mega-wealthy and powerful corporations. We are standing strong together to push back against policies that harm America’s workers.”