NEW YORK CITY - Millions of additional salaried workers will be eligible for overtime pay in the U.S. thanks to a new rule passed by the Biden Administration, AP News reports.
The U.S. Department of Labor unveiled a new rule that will extend overtime pay to salaried workers who earn less than $43,888 annually, a measure that will go into effect on July 1. That cap will then rise to $58,656 by the start of 2025. Previously, only workers who made $684 or less each week, or $35,568 annually, were eligible for overtime pay.
The new measure will allow about 4.3 million workers across the country to qualify for time-and-a-half payment for working more than 40 hours a week.
"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," acting Secretary of Labor Julie Su said in a prepared statement. "That is unacceptable."
Under federal law, nearly all hourly workers in the U.S. are entitled to overtime pay after 40 hours a week. But many salaried workers are exempt from that requirement — unless they earn below a certain level.
The new rule also expands overtime eligibility for some highly-compensated workers. According to a Labor Department FAQ. The current $107,432 annual threshold for highly-compensated workers is set to increase to $132,964 on July 1 and $151,164 by the start of 2025.
The new rule could result in an additional $1.5 billion in pay for employees, according to an estimate from the Economic Policy Institute.
"Employers will be more than able to adjust to the rule without negatively impacting the overall economy," wrote EPI director of government affairs and advocacy Samantha Sanders and President Heidi Shierholz.
Amid the increase, some industry groups are pushing back against the overtime rule, saying that it will harm their operations and lead to job cuts. Some are also threatening legal action.
"We fear many hoteliers will have no option other than to eliminate managerial jobs that are long-established paths to advancement," American Hotel & Lodging Association (AHLA) interim President Kevin Carey said in a statement. "AHLA is reviewing all available options, including litigation, for defeating this ill-advised regulation."
Overtime pay isn't available to salaried workers who are considered "executive, administrative or professional" employees. Because of this, some researchers have pointed out that corporations give fake titles to low-ranking workers like "grooming manager" for a barber in order to make them appear like managers.
The new rule stipulates that only "bona fide" executive, administrative or professional employees are exempt from the expanded overtime rule.
Advocates, on the other hand, applauded the administration's rule, with some saying that the move is overdue.
"The rule is an important step toward correctly valuing one of the most precious resources workers have — their time," EPI president Heidi Shierholz said Tuesday. "This rule is an essential milestone in creating a stronger, fairer economy."
The Biden administration first announced plans for its new rule in late August, and submitted a proposal in September. The Labor Department said it "conducted extensive engagement with employers, workers, unions and other stakeholders" and considered more than 33,000 comments as it developed the final rule.
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