ILR School

The Economic Effects of Canceling Scheduled Changes to Overtime Regulations

Other Titles


[Excerpt] The federal Fair Labor Standards Act of 1938 (FLSA) requires employers to provide certain workers with overtime pay when they work more than 40 hours in a week. That overtime pay must be at least 150 percent of the worker’s usual hourly wage. The Department of Labor has issued a rule—set to take effect on December 1, 2016— that substantially raises the salary thresholds below which salaried workers are automatically eligible for overtime pay. By the Congressional Budget Office’s estimate, the new rule extends the FLSA’s overtime requirements to an additional 3.9 million workers (about 3 percent of all workers in the United States). Of those additional workers, about 900,000 regularly or occasionally work overtime and will therefore earn more (or work less) because of the changes. The changes’ potential economic impact has raised concerns among policymakers. In this report, CBO analyzes how canceling the changes before they come into force would affect employers, employees, and family income in the United States through 2022. CBO finds that canceling the changes would reduce employers’ payroll and compliance costs and increase profits. The cancellation would also decrease employees’ pay, but it would increase real family income—that is, income adjusted to remove the effects of inflation—because an increase in firms’ profits and a decrease in prices would more than offset the reduction in some workers’ earnings. The estimated effects of canceling the scheduled changes to overtime regulations are close to, but not equivalent to, the effects of the changes themselves with the signs reversed. Employers have already incurred some compliance costs, including some of the costs of familiarizing themselves with and adjusting to the scheduled changes, and would not be able to recover those costs if the changes were canceled.

Journal / Series

Volume & Issue



Date Issued




overtime regulations; payroll; compliance costs; profits


Effective Date

Expiration Date




Union Local


Number of Workers

Committee Chair

Committee Co-Chair

Committee Member

Degree Discipline

Degree Name

Degree Level

Related Version

Related DOI

Related To

Related Part

Based on Related Item

Has Other Format(s)

Part of Related Item

Related To

Related Publication(s)

Link(s) to Related Publication(s)


Link(s) to Reference(s)

Previously Published As

Government Document




Other Identifiers


Rights URI



Accessibility Feature

Accessibility Hazard

Accessibility Summary

Link(s) to Catalog Record