The Biden administration has finalized a new rule that will make millions of more salaried workers eligible for overtime pay in the U.S. The move marks the largest expansion in federal overtime eligibility seen in decades.
According to the Labor Department, starting July 1, employers will be required pay overtime to salaried workers who make less than $43,888 a year in certain executive, administrative and professional roles. That cap will then increase to $58,656 by the beginning of 2025.
The new rule also expands overtime eligibility for some highly-compensated workers. 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 Labor Department estimates that 4 million lower-paid salary workers who are exempt under current regulations will become eligible for overtime protections in the first year under the new rule. An additional 292,900 higher-compensated workers are also expected to get overtime entitlements.
The July 1 increases update the current salary thresholds using methodology put in place under the Trump administration’s 2019 regulation. The new rule’s methodology takes effect Jan. 1, the Labor Department said, with salary thresholds set to update every three years based on the latest wage data.
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.
Critics have argued that the new regulation could saddle companies with new costs and add to persistent labor challenges. Meanwhile, advocates applauded the administration’s rule — with some noting that such a move is overdue.
The left-leaning Economic Policy Institute says that the overtime threshold has not been updated properly for almost 50 years — leaving millions without such federal protections.
