4 Million More Workers Could Be Eligible For Overtime Pay Under New Biden Rule
A new federal rule to expand overtime protections to millions of workers now excluded under current law has been finalized, the Biden administration said Tuesday.
The Labor Department’s regulation would ensure that salaried workers who earn less than $58,656 per year would automatically be entitled to overtime pay when they work more than 40 hours in a week, starting in 2025. What’s known as the “overtime salary threshold” would then be updated every three years, starting in 2027, to account for inflation.
The agency estimated that the change would extend the overtime law’s coverage to an additional four million workers, meaning they couldn’t be forced to work extra hours without their employers paying a premium.
Julie Su, the Labor Department’s acting secretary, said updating the regulation was about basic fairness.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” Su said in a statement. “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.”
Most hourly workers are entitled to time-and-a-half pay when they log over 40 hours, which discourages employers from working them too much. But whether salaried workers can get overtime pay depends on how much they earn and what their job duties are. Employers have an incentive to pile work onto those without overtime protections, since the extra work is done essentially for free.
This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time.Julie Su, acting labor secretary
The current overtime salary threshold is just $35,568, set by the administration of former President Donald Trump. Salaried workers, such as retail store managers, must earn less than that amount to automatically be entitled to any additional pay when they work more than 40 hours.
Progressives have fought for years to increase the salary threshold in order to restore the share of the U.S. workforce that gets paid overtime. An effort by former President Barack Obama was blocked in federal court in 2017. His successor, Trump, released a watered-down version of the reform that covered fewer workers than Obama’s version would have.
Last year the Biden administration said it planned to raise the threshold to a little over $55,000. It ultimately hiked that figure to $58,656 to account for newer wage data.
Business groups aren’t excited about higher labor costs and could end up challenging the regulation in federal court, just as under Obama.
David French, senior vice president of government relations at the National Retail Federation, a trade group, said in a statement that the new Labor Department rule would “cause employers to reexamine compensation packages for millions of workers nationwide.” He also said retailers were “concerned” that the inclusions of automatic increases to the salary threshold “exceeds the Department’s legal authority.”
The Economic Policy Institute, a left-leaning think tank, projected that more than half the beneficiaries of the new regulation would be women, and nearly a quarter would be workers of color. The group also argued that automatic increases to the salary threshold were essential to keeping overtime protections robust.
Heidi Shierholz, EPI’s president, wrote in a blog post that the regulation would give employers more “skin in the game” when they expect employees to work excessive hours. Some employers, she noted, will simply raise workers’ salaries above the new threshold in order to avoid having to deal with overtime pay.
“As a result, these workers will either get those extra hours back or they will get higher wages when they do work long hours — whether through salary increases or by earning time-and-a-half overtime pay,” Shierholz said.
