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DOL Rule Expands Overtime Pay Eligibility for Millions

S.J. Steinhardt
Published Date:
Apr 25, 2024

Millions more salaried workers will be eligible for overtime pay under a new rule finalized by the U.S. Department of Labor, The Associated Press and other news sources reported.

Starting on July 1, employers will be required to pay overtime to salaried workers who make less than $43,888 a year in certain executive, administrative and professional roles. That cap will then rise to $58,656 by the start of 2025. Starting on July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

“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,” said Acting Labor Secretary Julie Su 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. The Biden-Harris administration is following through on our promise to raise the bar for workers who help lay the foundation for our economic prosperity.”

The current overtime eligibility threshold of $35,568 was set under the Trump administration in 2019, the AP reported.

Most hourly workers are already entitled to overtime pay, but nonhourly workers in executive, administrative and professional roles—including some supervisors—are exempt unless they earn less than the threshold set by the Labor Department, The Washington Post reported. An Economic Policy Institute (EPI)  analysis of the rule cited by the Post found that 4.3 million more workers will be eligible for overtime pay because of the rule. That includes 2.4 million more women and one million more people of color.

“The rule is an important step toward correctly valuing one of the most precious resources workers have—their time,” EPI president Heidi Shierholz said in an interview with the AP  “This rule is an essential milestone in creating a stronger, fairer economy.”

Business associations protested the rule.

David French, executive vice president of government relations at the National Retail Federation (NRF), said in a statement that the rule could result in workers losing managerial positions and the ability to work from home, and it could “cause employers to reexamine compensation packages for millions of workers nationwide.”

“This rule is the latest unnecessary and burdensome regulation from the Biden administration targeting small businesses,” said Michael Layman, senior vice president of government relations and public affairs at the International Franchise Association (IFA)  in a statement. “It comes as many entrepreneurs continue to struggle in today’s unpredictable regulatory climate, grappling with lingering inflation, labor challenges, and high costs of goods. Small business owners, especially franchisees, need certainty to operate, and this Administration has provided them anything but predictability.”