Millions more in US to be eligible for OT
The Biden administration on Tuesday announced a new rule that would make millions of white-collar workers newly eligible for overtime pay.
Starting July 1, the rule would increase the threshold at which executive, administrative and professional employees are exempt from overtime pay to $43,888 from the current $35,568. That change would make an additional 1 million workers eligible to receive time-and-a-half wages for each hour they put in beyond a 40-hour week.
On Jan.1, the threshold would rise further to $58,656, covering 3 million more workers.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid for that time,” acting Labor Secretary Julie Su said in a statement. “So often, lowerpaid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. This is unacceptable.”
The new standard fulfills one of President Joe Biden’s signature objectives of raising the wages of low- and middle-class Americans and it comes within months of his face-off with former President Donald Trump in the November election. For years, Biden and Democrats in Congress have proposed raising the federal minimum wage from $7.25 an hour but have been blocked by Republican lawmakers.
Last summer, the Labor Department proposed lifting the salary threshold for exempt employees to about $55,000 but updated the benchmark in the final rule after receiving more than 33,000 public comments.
While hourly workers are generally entitled to overtime pay, salaried workers are not if they earn above a certain pay level and supervise other workers, use professional expertise or judgment, or hire and fire workers, among other duties.
The new standard could be legally challenged by industry groups that have argued that excessively raising the standard exceeds Labor’s authority and adds heavy regulatory and financial burdens or compliance costs.
“This rule is another costly hoop for small-business owners to jump through,” said Beth Milito, executive director of the National Federation of Independent Business’ small-business legal center.
Some companies could lift workers’ base pay to the new threshold to avoid paying overtime or convert salaried workers to hourly employees who need to punch a clock. Others could instruct salaried employees to work no more than 40 hours a week, bringing on parttime workers to pick up the slack.
The initial bump in the salary threshold to $43,888 that takes effect July 1 is based on a Trump administration formula that sets it at the 20th percentile of the full-time weekly earnings of salaried employees in the lowestwage region, the South. The increase to $58,656 on Jan. 1 adopts a new formula that sets the threshold at the 35th percentile of those weekly earnings. Starting July 1, 2027, the rule requires Labor to adjust the salary threshold every three years to account for updated data.