New rule grants OT for more salaried workers

NEW YORK — The Biden administration has finalized a new rule set to make millions of more salaried workers eligible for overtime pay in the U.S.

The move marks the largest expansion in federal overtime eligibility seen in decades. Starting July 1, employers will be required pay overtime to salaried workers who make less than $43,888 a year in certain executive, administrative and professional roles, the Labor Department said Tuesday. That cap will then rise to $58,656 by the start of 2025.

“Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable,” acting Secretary of Labor Julie Su said in a prepared statement.

She added that the administration was “following through on our promise to raise the bar.”

Tuesday’s news marks a significant jump from the current overtime eligibility threshold of $35,568, which was set under the Trump administration in 2019 — just three years after a more generous Obama-era effort was ultimately scuttled in court after facing pushback from some business leaders and Republican politicians.

Under the federal law, nearly all hourly workers in the U.S. are entitled to overtime pay after 40 hours a week. But many salaried workers are exempt from that requirement — unless they earn below a certain level.

The new rule also expands overtime eligibility for some highly-compensated workers. According to a Labor Department FAQ, the current $107,432 annual threshold for highly-compensated workers is set to increase to $132,964 on July 1 and $151,164 by the start of 2025.

The Labor Department estimates that 4 million lower-paid salary workers who are exempt under current regulations will become eligible for overtime protections in the first year under the new rule. An additional 292,900 higher-compensated workers are also expected to get overtime entitlements.

The July 1 increases update the current salary thresholds using methodology put in place under the Trump administration’s 2019 regulation.