More Eligible For Overtime Pay In 2020 – Labor Market Dynamics

An additional 1.3 million workers in the U.S. are eligible for overtime pay this year. Overtime pay is traditionally one-and-a-half times a worker’s hourly rate at 40-hours per week. The change is effective January 1, 2020 and affects employees earning up to $35,568 per year.

The annual salary threshold increase to $35,568 from $23,660 means that workers earning up to $35,568 per year are eligible for overtime pay. The previous threshold of $23,660 had not been revised since 2004. The Labor Department noted that the increased threshold was necessary to account for the higher cost of living expenses.

The additional number of eligible workers is a challenge for some employers, because of higher labor costs. Companies employing large numbers of workers earning less than $35,568 are seeing an increase in labor costs due to the newly imposed rules.

Source: Labor Department

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