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Obama says millions could get raise this year

Posted: 7:13 AM, May 18, 2016
Updated: 2016-05-18 13:30:28Z

Are you getting a raise this year? 

According to an email from President Obama posted online Tuesday, the Department of Labor is expected to finalize a rule Wednesday that will expand overtime pay to 4.2 million more Americans. 

Currently, salaried workers making $23,660 or more a year are not legally entitled to overtime pay. The Obama administration is changing the threshold to $47,500 a year, meaning any U.S. worker making a salary less than that will be given overtime.

"Americans have spent too long working long hours and getting less in return," Obama wrote. "So wherever and whenever I can make sure that our economy rewards hard work and responsibility, that's what I'm going to do."

The White House also expects the move to catapult wages $12 billion over the next 10 years. It will go into effect Dec. 1.

So what does it mean for workers?  It depends on how business leaders react to the changes.

1. Employers may give some salaried workers a raise.

For some employers, it may make sense to hoist a worker's pay over the threshold. Especially if they are making just under $47,500 a year.

2. Employers may limit their salaried workers to 40 hours. 

There may be fewer salaried workers burning the midnight oil. Less working means more free time for employees, but possibly less productivity for the company.

3. Employers may lower wages and convert workers to hourly.

Converting workers to non-exempt hourly employees would give the employer an option to lower wages to account for anticipated overtime. For example, a salaried position that averaged $25 an hour may be converted to an hourly position paying $22 an hour. The cut in pay would help offset the cost of overtime.

4. Employers may pressure workers to cram more into their work week.

If an employer believes a worker should be able to finish their work in 40 hours, they may insist the employee makes it happen. The new rule could spur more expectations and stress all in the name of efficiency.

The Obama administration also changed the rules so they automatically update every three years. The overtime threshold was last updated in 2004.