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A change in federal rules means millions more Americans will soon be eligible for overtime pay.
The Biden administration announced Tuesday a rule change that would increase the maximum salary that allows executive, administrative and professional employees to be exempted from overtime pay. The change would be phased in: increasing to $43,888 in July and $58,656 in January 2025. Then, beginning in 2027, the threshold would increase every three years using up-to-date wage data to determine new salary levels.
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“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,” Acting 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. That is unacceptable.”
Currently, the threshold is $35,568, meaning salaried workers who earn more than that aren’t eligible for overtime pay if they work more than 40 hours a week. The rules do not affect overtime requirements for workers who are paid hourly.
The Labor Department estimated the July change would make an additional 1 million more workers eligible to receive time-and-a-half pay. The January change would add another 3 million employees.
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U.S. regulations require employers to pay eligible workers one-and-a-half times their regular rate of pay for each hour they work above 40 hours in a week. Salaries workers who earn above the threshold can still receive overtime pay if they do not primarily perform manage-related duties. Currently, employees who earn a salary of more than $107,432 are automatically exempt from overtime pay but the new rule will boost that cutoff to $151,000, Reuters reported.
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