Then, beginning from Jan. 1, 2025, the salary threshold under which employers are required to pay overtime to employees will rise to $58,656.
Under federal law, nearly all eligible workers must be paid 1.5 times their regular rate of pay when they work more than 40 hours in a week.
However, many salaried workers, including lower-earning employees, are exempt from the requirement unless they earn below a certain level.
Under the new rule, salaried workers who earn above the salary threshold could still be entitled to overtime pay if they do not work in positions where they primarily perform management-related duties.
The rule does not affect overtime requirements for workers who are paid hourly.
Officials said the new rule updates the current overtime eligibility threshold of $684 or less each week, or $35,568 annually, which was based on methodology used by the Trump administration in 2019.
Biden Admin ‘Raising the Bar’ for Workers
Starting July 1, 2027, the current $107,432 annual threshold for highly compensated workers will rise to $132,964 and will be updated every three years.By the start of 2025, that threshold will reach $151,164, according to the new rule.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” said Acting Secretary Julie Su in a statement.
“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. That is unacceptable. The Biden-Harris administration is following through on our promise to raise the bar for workers who help lay the foundation for our economic prosperity,” Ms. Su added.
The DOL estimates that 4 million lower-paid salary workers who earn at least $684 per week but less than $844 per week will be eligible for overtime under the new rule.
An additional 292,900 higher-compensated workers are also expected to be affected by the proposed increase, officials said.
The department said the final rule followed “extensive engagement with employers, workers, unions and other stakeholders,” with Biden admin officials considering more than 33,000 comments while developing the new rule.
Rules Could Put Extra Pressure on Companies
Officials added the new updates will grant millions more American workers more time with their families and ensure workers either earn more or are paid the same to work fewer hours.However, not everyone has welcomed the newly expanded overtime thresholds, with American Hotel & Lodging Association (AHLA) interim president & CEO Kevin Carey warning that the updates could have the opposite effect and instead put jobs on the line.
In a statement, Mr. Carey called the rule “part of a growing list of aggressive federal regulatory efforts that are making it even harder for hoteliers to operate their businesses in this challenging environment.”
“The impacts of this regulation will risk the elimination of jobs and make it more difficult for employees to pursue the existing pathways to success and career growth that the industry offers,” he continued. “We fear many hoteliers will have no option other than to eliminate managerial jobs that are long-established paths to advancement. AHLA is reviewing all available options, including litigation, for defeating this ill-advised regulation.”
Elsewhere, North Carolina Republican and chair of the House Education and the Workforce Committee, Rep. Virginia Foxx, argued the regulation could leave companies riddled with new additional costs, forcing them to convert salaried jobs into hourly positions while lowering employees’ pay.
“If the administration’s goal with this rule is to improve the standard of living for workers, then it’s failing miserably,” Ms. Foxx said in a statement.
