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Walmart Combatting Overtime Rule By Raising Managerial Salaries

Walmart Combatting Overtime Rule By Raising Managerial Salaries

BENTONVILLE, AR - Walmart has raised its salaries for entry-level managers, bumping up its average from $45,000 to $48,500 annually. The retail giant is the largest private employer in the United States, with 1.5 million workers, Reuters reports. 

In tandem with its second quarter bonuses of more than $201 million for meeting its service targets, the raises went into effect in September of this year. This is on top of an increase of the company’s entry level wages to $10 an hour in December of last year—$2.75 an hour above the federal minimum wage. As we reported back then, Walmart announced it would be investing $2.7 billion in employee compensation and training over a two year period.

So, why the increase? Analysts at Reuters have tied it to the upcoming new overtime rule, which extends mandatory overtime pay to more than 4 million of the country’s workers. Set to begin this upcoming December 1, the new rule will require employers to pay overtime to salaried workers earning less than $47,500 a year—double the current threshold of $23,660.

Randy Hargrove, Director of National Media Relations, Walmart

"We think the starting rate of $48,500 a year...would make a lot of business sense for our company,” Director of National Media Relations, Randy Hargrove, told Reuters.

However, this law may be in limbo for some time, it seems. In September, officials from 21 U.S. states filed a lawsuit claiming the new overtime rule will “place a heavy burden on state budgets,” according to Reuters, with the U.S. Chamber of Commerce and other business groups filing a separate challenge. Additionally, business groups have said the rule may lead to employers demoting some salaried management workers to hourly positions, creating part-time jobs that do not offer benefits.

Will other major retailers follow suit as the law inches closer? Keep watching AndNowUKnow for updates on this, and other wage rulings affecting the industry.