Overtime Pay: Millions of salaried workers will be eligible under the Biden administration's final rule

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More salaried workers will be eligible for overtime pay.


Millions of wage workers will soon qualify for overtime pay under a final rule released by the U.S. Department of Labor on Tuesday.

The new rule raises the salary threshold under which salaried employees are eligible for overtime in two stages. The minimum will increase to the equivalent of an annual salary of $43,888, or $844 per week, starting July 1, and then to $58,656, or $1,128 per week, on January 1, 2025.

The agency estimates that about 4 million additional workers will qualify for overtime when the rule is fully implemented in January. In its first year, the rule is expected to shift about $1.5 billion in income from employers to workers, mainly from new overtime premiums or from wage increases to maintain exempt status for some affected employees.

“This rule will restore the promise to workers that if you work more than 40 hours a week, you should get paid more for that time,” the acting Labor leader said. Secretary Julie Su said in a statement. “Too often, low-wage workers do the same work as their hourly counterparts but spend more time away from their families without additional pay. This is unacceptable.”

The current limit is $35,568 per year, or $684 per week, which was set by the Trump administration in 2019.

The salary limit will be updated every three years, starting July 1, 2027, the agency said.

Business groups are expected to resist these efforts, as they did successfully when the Obama administration tried to raise the threshold significantly. Trade associations quickly backed away from the latest Proposed rule When it was released in August, they said it would raise costs for their members and hurt their operations.

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“I suspect such large increases could be particularly burdensome on many small businesses, forcing some to choose between cutting jobs and raising prices,” said Ted Hollis, a partner at law firm Quarles & Brady. “Some businesses that cannot do either may be forced to close, creating unintended but predictable side effects of this government action.”

The rule “will significantly increase” operating costs for small restaurant owners who are “desperately trying” to keep menu prices stable, Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, said in a statement.

“And because the DOL created a one-size-fits-all rule based on national income data, rather than regional data, this change will disproportionately affect restaurant owners in the South and Midwest,” he said.

The rule will disrupt the entire construction industry, said Ben Brubeck, vice president of regulatory, labor and state affairs at Associated Builders and Contractors, and noted that the trade group will consider all options, including a legal challenge. The rule “will significantly limit employee workplace flexibility in setting schedules and work hours, harming opportunities for career advancement,” he said in a statement.

In 2016, former President Barack Obama asked the Department of Labor to reform federal overtime rules and Increase the salary limit To $47,476 per year, or $913 per week. This would have almost doubled the level that existed at that time.

But business groups and 21 states sued, and later that year, A.J A federal judge in Texas issued an injunction. The Trump administration in 2017 said so He will not defend Al Qaeda Then raise the threshold to the current level.

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This story has been updated with additional information.

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