More salaried employees working more than 40 hours a week without extra pay could be eligible for overtime compensation if a new rule proposed by President Barack Obama goes into effect. But some Indiana officials and local business owners say the rule sounds better than it actually is and fear it will hurt small businesses.
The South Bend Tribune reported that the president said he wants to raise the threshold that requires salaried employees to be paid overtime. Currently, the salary of a worker who has “managerial authority” has to be paid less than $23,660 a year to be eligible for overtime. Under Obama’s proposed amendment of the Fair Labor Standards Act, any salaried employee making less than $50,400 a year, about $970 a week, would be required to earn overtime pay.
The wage cap for overtime pay was raised to its current level in 1975, but has not been adjusted for inflation, which is part of the argument for why the increase is needed for roughly 5 million U.S. workers Obama says would benefit.
In 1975, about 62 percent of the salaried workforce was eligible for overtime pay, according to the Economic Policy Institute, a Washington, D.C., think-tank that advocates for low-income workers. Today, about 8 percent are covered.
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