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Labor Department Nearly Doubles Salary Threshold in New Overtime Rule

(AP Photo/Andrew Harnik)

WASHINGTON — The Labor Department issued a new overtime rule Wednesday that one GOP senator warned will have “damaging” effects on communities.

“The department has issued a final rule that will put more money in the pockets of middle class workers – or give them more free time,” Labor said this morning, noting that the rule comes after President Obama ordered the department two years ago to review overtime regulations “to reflect the original intent of the Fair Labor Standards Act.”

The rule, effective Dec. 1, raises the salary threshold for overtime eligibility from $455 per week to $913 per week, or $47,476 per year. That threshold would be subject to automatic updates every three years.

The Labor Department estimates 4.2 million employees will be affected. Employers can respond, the department said, by limiting those workers to 40 hours per week, raising their salaries above the threshold, or paying time and a half.

“For decades, the salary threshold under which all white-collar, salaried workers qualify for overtime has failed to keep up with the rising cost of living. In 1975, 62 percent of full-time salaried workers were eligible for overtime protection based on their pay. Today, only 7 percent are eligible under the outdated salary level. The current salary level is so low that it does not effectively identify which white-collar workers are entitled to overtime protection. That is an economy out of balance,” Labor Secretary Tom Perez wrote in an explanation of the new rule.

“If you work full-time in America, you should be able to get by; when you work extra, you should be able to get ahead. That’s the commonsense principle we’re reaffirming today,” Perez added.

But Sen. Tim Scott (R-S.C.), a member of the Senate Health, Education, Labor & Pensions Committee, said the rule “will have swift and damaging impacts on hard-working American families, as well as small businesses, non-profits and colleges and universities.”

“This president and his administration continue to disregard the full economic realities of their policies, and their lack of foresight is clearly evident in the final overtime rule. Our nation’s economy, which is still struggling to recover, simply cannot afford to have the Obama administration continue to implement more damaging rules and regulations,” Scott said in a statement. “Bureaucrats in Washington cannot create jobs, but they certainly can destroy them.”

Scott introduced a bill in March to nullify the rule and require the Labor Department to conduct a thorough economic impact analysis before issuing another.

HELP Chairman Lamar Alexander (R-Tenn.) warned that tuition at one college in his home state could increase by $850 per student because of the rule.

In addition to co-sponsoring the nullification bill with Scott, Alexander said he and Sen. Ron Johnson (R-Wis.) “will also be introducing a Congressional Review Act resolution of disapproval on this rule in the coming days to protect Tennessee colleges and businesses from its harmful effects.”

Hillary Clinton, though, applauded the new rule in a statement as something to “lift up workers nationwide and help get incomes rising again for working families.”

“Within the first year these rules are in effect, millions more workers will be eligible for overtime, finally getting paid in full for the hours they are putting in on the job,” Clinton said. “But we have more work to do. No one who works 40 hours a week should have to raise a family in poverty. No one should have their fundamental rights to organize and bargain collectively stripped away by Republicans and their corporate allies. That’s why we need to raise the federal minimum wage back to the highest it’s ever been in this country and make sure it keeps rising over time, protect workers’ rights and safety on the job, and restore the basic bargain that built America’s mighty middle class—that if you work hard and play by the rules, you can get ahead and stay ahead.”