Biden administration finalizes rule to give overtime to millions more salaried workers

NEW YORK (AP) — The Biden administration finalized a new rule to make millions more salaried workers eligible for overtime pay in the United States.

The move marks the largest expansion in federal overtime eligibility seen in decades. Starting July 1, employers will be required to pay overtime to salaried workers who earn less than $43,888 a year in certain executive, administrative and professional roles, the Department of Labor said Tuesday. That limit will increase to $58,656 in early 2025.

“Too often, lower-wage salaried workers do the same work as their hourly counterparts, but spend more time away from their families without receiving any additional pay. That is unacceptable,” Acting Secretary of Labor Julie Su said in a prepared statement.

He added that the administration was “keeping our promise to raise the bar.”

Tuesday’s news marks a significant jump from the current overtime eligibility threshold of $35,568, which was established under the Trump administration in 2019, just three years after a more generous Obama-era effort was finally sunk in court after facing pushback from some business leaders and Republican politicians.

Under federal law, almost all hourly workers in the United States 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 paid workers. According to a Department of Labor FAQsThe current annual threshold of $107,432 for highly compensated workers will increase to $132,964 on July 1 and $151,164 in early 2025.

The Labor Department estimates that 4 million lower-wage workers who are exempt under current regulations will be eligible for overtime protection in the first year under the new rule. Another 292,900 higher-paid workers are also expected to gain overtime rights.

The July 1 increases update current salary thresholds using the methodology implemented under the Trump administration’s 2019 regulation. The new standard’s methodology will take effect Jan. 1, the Labor Department said, and wage thresholds will be updated every three years based on the most recent wage data.

The Biden administration first announced plans for your new period at the end of 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 while developing the final rule.

Critics have argued that the new regulation could burden companies with new costs and exacerbate persistent labor challenges. In a statement, U.S. Rep. Virginia Foxx, R-N.C., chairwoman of the House Education and Workforce Committee, said employers “are staring down the barrel of billions in annual costs to comply with the rule” and described the regulation as “excessive and clumsy.”

Meanwhile, its defenders applauded the administration’s rule, with some pointing out that such a measure was already necessary. The left-leaning Economic Policy Institute says the overtime threshold has not been adequately updated for nearly 50 years, leaving millions without such federal protections.

“The rule is an important step toward properly 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.”