About 4.3 million American workers who were not previously eligible for overtime pay could soon get time and a half to work more than 40 hours a week thanks to a new rule from the Biden administration.
US Department of Labor on Tuesday Revealed a new rule This would extend overtime pay to salaried workers who earn less than $1,128 per week, or $58,656 per year. Previously, only workers making $684 or less per week, or $35,568 per year, were eligible for OT.
Companies are required to pay workers 1.5 times their wages if they work more than 40 hours a week, but this protection has been limited to hourly workers and low-wage employees. Because of the payroll disruption, many salaried workers were performing the same duties as their hourly colleagues, but were unable to qualify for overtime, Acting Labor Secretary Julie Su said in a statement.
“This rule will re-promise to workers that if you work more than 40 hours a week, you should get paid more for that time,” she said.
The new rule could lead to a $1.5 billion increase in employee salaries, According to According to the Economic Policy Institute, a left-leaning think tank.
“Employers will be more than able to adapt to the rule without negatively impacting the overall economy,” EPI Director of Government Affairs and Advocacy Samantha Sanders and President Heidi Shierholz wrote.
Here's what to know about the new OT rule.
Why is overtime pay fixed?
The Fair Labor Standards Act requires that most workers who spend more than 40 hours a week at work receive 1.5 times their regular wage for every hour worked over that amount.
While almost all hourly workers are covered by the law, salaried employees are only eligible for OT if they earn less than a specified salary. Currently, that limit is $684 per week, or $35,568 per year.
This means that a worker who is paid less than that threshold “could be forced to work 60-70 hours a week for pay that is no more than if he or she worked 40 hours,” Sanders and Shierholz write. “The additional 20-30 hours are completely free to the employer, allowing employers to exploit workers without any consequences.”
Who is covered by the new overtime law?
The law covers workers who receive wages below certain limits, and will be implemented in two stages.
Starting July 1, salaried workers who earn less than $844 a week, or $43,888 a year, will be covered under the new rule. On Jan. 1, 2025, the salary limit will jump to $1,128 per week, or $58,656 per year, the Labor Department said.
Most of the additional workers who will now qualify for OT work in professional and business services, health care and social services as well as financial activities, EPI said. She added that about 2.4 million of the 4.3 million workers are women, while one million are people of color.
Who will not qualify for OT?
First, overtime pay is not available to salaried employees who are considered “executive, managerial, or professional” employees.
Some researchers pointed out that companies give Fake addresses To low-ranking workers such as “grooming manager” to barber to make them appear as managers.
The new rule states that only “honest” executive, managerial, or professional employees are exempt from the expanded OT rule.
What do companies say about the new rule?
Some industry groups oppose the overtime rule, saying it would hurt their operations and lead to job cuts. Some are also threatening legal action.
“We fear that many hoteliers will have no choice but to eliminate management positions that are well-established paths to advancement,” Kevin Carey, interim president of the American Hotel and Lodging Association (AHLA), said in a statement. “AHLA is reviewing all available options, including litigation, to defeat this ill-advised regulation.”
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