Biden Extends Overtime Pay to Over 4 Million US Workers — Here’s Who Qualifies for the Paycheck Bump
About 4 million lower-paid U.S. white-collar workers will qualify for overtime pay they didn’t get before, thanks to a new rule announced last week by the Biden administration. However, some industry groups are already threatening to challenge it.
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The rule, which goes into effect on July 1, 2024, would increase the salary threshold at which executive, administrative and professional employees are exempt from overtime pay to $43,888 from the current $35,568 per year, according to an April 23 press release from the U.S. Department of Labor.
The July change would make an additional 1 million workers eligible to receive time-and-a-half wages for each hour they put in beyond a 40-hour week, USA Today reported. On January 1, 2025, the threshold would rise further, to $58,656, adding another 3 million workers.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid for that time,” Acting Labor Secretary Julie Su said 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. This is unacceptable.”
Key provisions of the rule include the following:
Expanding overtime protections to lower-paid salaried workers
Ensuring that employees who are not “overtime exempt” receive time-and-a-half pay when working more than 40 hours in a week or gain more time with their families
Providing for regular updates to the salary thresholds every three years to reflect changes in earnings. This provision is designed to protect “future erosion of overtime protections so that they do not become less effective over time.”
The rule changes were greeted with enthusiasm by unions, worker advocacy groups and many Democrats, Reuters reported. The country’s largest labor federation, the AFL-CIO, issued a statement praising the Biden administration for “restoring overtime protections that it said had been ‘gutted’ by the Trump administration.”
But not everyone is happy about the rule — especially business groups and pro-business lawmakers.
“This rule … comes as many entrepreneurs continue to struggle in today’s unpredictable regulatory climate, grappling with lingering inflation, labor challenges and high costs of goods,” Michael Layman, senior vice president at the International Franchise Association, said in a statement reported by Reuters.
As USA Today reported, the rule could find itself facing legal challenges from industry groups before it even has a chance to get off the ground. Opponents argue that by raising the overtime standard, the DOL is overstepping its authority and handcuffing businesses “with regulatory and financial burdens or compliance costs.”
“This rule is another costly hoop for small business owners to jump through,” Beth Milito, executive director of the National Federation of Independent Business’s small business legal center, told USA Today. “Small businesses will need to spend valuable time evaluating their workforce to properly adjust salaries or reclassify employees in accordance with this complicated mandate.”
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