The Biden administration has announced a significant change that will impact millions of salaried workers in the United States. This new rule, set to take effect on July 1, will make more employees eligible for overtime pay, marking the most extensive expansion in federal overtime eligibility in decades.
Under the new regulation, salaried workers in certain executive, administrative, and professional roles who earn less than $43,888 annually will be entitled to overtime pay. This threshold will increase to $58,656 by the beginning of 2025.
Acting Secretary of Labor Julie Su emphasized the importance of this change, stating that lower-paid salaried workers often perform the same duties as their hourly counterparts but do not receive additional compensation for their extra time spent working.
The current overtime eligibility threshold of $35,568, established during the Trump administration in 2019, will be significantly raised under the new rule. This adjustment aims to ensure that more workers are fairly compensated for their time and efforts.
In addition to expanding overtime eligibility for lower-paid workers, the new rule will also benefit highly-compensated employees. The annual threshold for highly-compensated workers will increase to $132,964 on July 1 and $151,164 by the start of 2025.
The Labor Department estimates that approximately 4 million lower-paid salaried workers and 292,900 higher-compensated employees will become eligible for overtime protections within the first year of implementing the new rule.
The Biden administration's decision to update the overtime eligibility thresholds has received mixed reactions. While critics argue that the regulation could impose financial burdens on businesses, advocates view it as a crucial step towards creating a fairer economy.
The new rule, which follows a comprehensive engagement process with various stakeholders, will come into effect on July 1. Moving forward, the salary thresholds will be updated every three years based on the latest wage data, ensuring that workers are adequately compensated for their time and contributions.
