Todd Spangler

Detroit Free Press

WASHINGTON – More than 100,000 salaried workers in Michigan could be eligible to receive overtime pay later this year under a rule set to be announced by the Obama administration on Wednesday.

On Tuesday evening, the White House went public with news that after more than two years of study, the Labor Department was preparing to issue its final rule updating overtime protections for salaried workers making below a certain threshold.

The rule — which will become effective Dec. 1 — means that most salaried workers making under $47,476 a year will be guaranteed overtime for working more than 40 hours a week, doubling the current salary threshold of $23,660. Hourly workers already are generally guaranteed overtime pay.

New federal overtime rule explained

In total, the change is expected to provide overtime protection to more than 4 million Americans who do not currently have it, and, with the level now expected to be updated every three years, could boost wages for workers by as much as $12 billion over the next decade.

A list produced by the White House of the state-by-state impact of the change showed that as many as 101,463 Michigan workers could be eligible for overtime pay under the change — though employers could always get around it by increasing salaries above the threshold or reducing workers' hours.

While some labor organizations, including the AFL-CIO, have praised the proposed change, which was set in motion by President Barack Obama in 2014, as a “much-needed boost to America’s working people,” others in business have said it could cost jobs.

“This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact,” U.S. Chamber of Commerce Senior Vice President of Labor, Immigration and Employee Benefits Randy Johnson said last year.

The administration, however, has maintained that it is long past time to update the overtime protections guaranteed under the Fair Labor Standards Act (FLSA), noting that the share of full-time salaried workers qualifying for overtime fell from 62% in 1975 to about 7% now. The rules have only been updated once since the 1970s.

Under the FLSA, salaried workers are expected to receive overtime for hours worked in excess of 40 hours a week, unless they make more than the threshold set by the Labor Department and are determined to perform primarily executive, administrative or professional duties. Some occupations — including teachers, doctors, lawyers and some others — are subject to separate provisions.

Wednesday’s rule-making raises the salary threshold below which OT is required from $23,660 to $47,476 a year, or from $455 to $913 a week. While applicable nationally, the threshold was set to a level no higher than that made by the lowest 40% of full-time salaried workers in the lowest income region of the country, which currently is the South.

With the threshold to be revisited every three years, it is expected to rise to more than $51,000 with the first update in 2020, based on current estimates for wage growth. The rule change, meanwhile, continues to allow employers to count bonus and incentive payments toward up to 10% of the salary threshold — and also allows for commissions to be part of that calculation.

Contact Todd Spangler: 703-854-8947 or at tspangler@freepress.com. Follow him on Twitter at @tsspangler.