Labor Department expands overtime pay eligibility to 3.6 million salaried workers.
The Department of Labor Proposes New Overtime Pay Rule
The Department of Labor has recently proposed a new rule that aims to extend overtime pay protections for millions of workers. This decision has sparked concerns among businesses, who fear that it could lead to staffing issues.
The proposed rule would guarantee overtime pay for most salaried workers earning less than $1,059 per week, which is approximately $55,000 per year. Currently, only salaried employees making less than $35,568 per year are eligible for overtime pay. If implemented, this new proposal is expected to extend overtime protections to an additional 3.6 million salaried workers.
One notable feature of the rule is the automatic updating of salary thresholds every three years to reflect the earnings data of that time. This measure aims to prevent any erosion of overtime protections in the future.
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“We are committed to ensuring that all workers are paid fairly for their hard work,” said Principal Deputy Wage and Hour Division Administrator Jessica Looman. ”For too long, many low-paid salaried workers have been denied overtime pay, even though they often work long hours and perform much of the same work as their hourly counterparts. This proposed rule would ensure that more workers receive extra pay when they work long hours.”
The current threshold of $35,568 was set by the Trump administration, which was an increase from the previous level of $23,660.
During the Obama administration, an attempt was made to double the threshold to $23,660, but it was blocked by a federal judge who deemed that the Labor Department had exceeded its authority by setting the threshold too high.
Business leaders have expressed concerns about setting the salary threshold for overtime pay at a high level, as it could lead to staffing issues for small businesses. Some may even consider converting salaried workers to hourly ones.
Josh Ulman, spokesman for the Partnership to Protect Workplace Opportunity, voiced disappointment with the Labor Department’s overtime proposal. He stated, “The DOL is proposing a nearly 55 percent increase to the minimum salary threshold. Massive increases in labor costs like this simply cannot be absorbed by businesses. Meanwhile, automatic increases are unlawful and will set up the economy for failure, as increases will occur regardless of economic circumstances, exacerbating any problems that may exist.”
Mr. Ulman also warned that the rule would result in a “substantial reduction” in access to entry-level administrative, executive, and professional salaried positions. He added, “It will reduce opportunities, especially for recent graduates and younger professionals hoping to begin their careers.”
Senator Mike Braun (R-Ind.) criticized the Biden administration and Acting Labor Secretary Julie Su in a post on the social media platform X. He stated, “President Biden and his Acting Labor Secretary Julie Su—who they haven’t put up for a vote in the Senate, because she doesn’t have the votes to be confirmed—are putting out a job-killing overtime rule that’s even more extreme than the one struck down by the courts when Obama tried it. At a time when businesses are cutting jobs just to avoid bankruptcy due to Bidenflation, now is the worst time to make drastic changes that will lead some businesses to fire workers.”
The Leadership Conference on Civil and Human Rights, a human rights coalition, welcomed the Labor Department’s new proposal. They stated in a post on X, ”We applaud @USDOL’s proposed rule to strengthen and expand overtime protections for more working people in America. Updating the salary threshold is necessary and important, and it will help workers of color who disproportionately work in low-wage roles.”
Overtime Pay Situation
According to the Fair Labor Standards Act (FLSA), almost all hourly workers in the United States are entitled to overtime pay once their work time exceeds 40 hours a week. The pay for overtime must not be less than one and a half times the regular rate.
However, salaried employees engaged in administrative, executive, or professional roles are exempt from this overtime rule unless they earn below the salary threshold.
The Economic Policy Institute estimates that currently, only 15 percent of full-time salaried employees are entitled to overtime pay under the Trump-era policy, as they earn less than the threshold. This is significantly lower than the over 60 percent threshold in the 1970s.
The Labor Department estimates that the new overtime pay rules would benefit approximately 27 percent of salaried workers.
The new proposal would also extend overtime pay protections to U.S. territories where the federal minimum wage applies.
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