New Overtime Rules to Take Effect from December 1; A look into the Basics

On May 17, the new overtime rule brought in by the Obama administration was finalized. It is going into effect from December 1, across the nation's workplaces.

For the working people, it is great news but for the employers it might look like an uphill task to comply to the new regulations. The action by the government might be considered as the most significant action of the administration on behalf of the middle class working people.

The basics of the final rule are that the new salary threshold is $47,476, or $913 a week almost twice the present weekly threshold of $455. The salaried workers whose pay remains below the overtime threshold will get an overtime pay.

According to the Department of Labor, 4.2 million workers in the U.S will be affected by the rule that represents the number of salaried workers who have become newly eligible for an overtime pay, their salary being somewhere between the present and the newly set threshold which is in between $455 and $913.

Every three years, the new threshold will be adjusted to a fortieth percentile, which is based on full-time salary of the lowest paid region.

According to the Department of Labor, the new rule will cost $1.5 billion a year to the employers; with $1.2 billion in new overtime pay and $300 million in administrative expenses that will be incurred in implementing the changes.

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