In a move that could affect millions of workers, the Biden administration announced on Wednesday that it is proposing a significant increase in the threshold at which most salaried workers automatically get overtime pay for half the time.
Under the proposed rule, released by the Labor Department, the maximum amount for receiving overtime pay after a 40-hour week would rise to about $55,000 annually from about $35,500, a level set during the Trump administration.
The ministry said about 3.6 million wage workers who fall between the current limit and the new limit would actually be eligible for overtime pay under the proposed rule. Some employers may choose to raise workers’ wages above $55,000 to avoid overtime pay.
The rule “would help restore economic security to workers by giving millions of salaried workers the right to protection from overtime,” Julie Su, acting secretary at the department, said in a statement.
Some industry groups, particularly in retail, restaurant, and hospitality businesses, have argued that expanding overtime eligibility could lead many employers to convert some salaried workers into hourly workers and lower their hourly wages to leave their gross wages unchanged.
These groups argue that greatly expanding overtime eligibility could discourage employers from promoting workers to entry-level management positions that provide a path to well-paying jobs, because more employers would have to pay junior managers overtime when they work long hours.
The proposal follows a similarly ambitious move by the Obama administration in 2016, which sought to raise the maximum overtime limit for most salaried employees to $47,500 from about $23,500. But before Donald J. Trump took office as president, a Texas federal judge suspended Obama’s ruling, concluding that the administration lacked the legal authority to significantly raise the overtime limit.
The Trump administration subsequently fixed the current overtime limit of about $35,500.
Under the Biden administration’s proposal, the overtime limit would be automatically adjusted every three years to keep pace with rising earnings.
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