Labor Department expands overtime pay eligibility 

WASHINGTON (CN) — The U.S. Department of Labor has finalized a regulation to extend overtime pay eligibility for an estimated 4 million workers.

Officials announced Tuesday they’ve approved an update to the Fair Labor Standards Act to raise overtime pay requirements for salaried employees.

“If you work extra hours, you deserve extra pay,” President Joe Biden said in a statement.

The act, enacted in 1938, entitles nearly all hourly workers to overtime pay after 40 hours a week at no less than time-and-half their regular rates. Salaried workers are exempt from that requirement unless they earn below a certain level.

The current threshold is $35,568, which was implemented by the Trump administration in 2019, raising the limit from $23,660.

The plan increases the threshold in two steps. First, on July 1, it will rise to $43,888 annually. It will increase again on Jan. 1 to $58,656.

Starting Jan. 1, the method for revising the standards will also change to automatically update every three years based on wage data.

“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 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. That is unacceptable.”

Washington Senator Patty Murray said the new benchmarks will ensure workers “get the overtime compensation they deserve when working long hours away from their families.”

“This will make a material difference in the lives of over 4 million workers — giving their families extra breathing room for their extra labor,” she said.

The final rule exceeds levels proposed by President Barack Obama, who sought to raise the threshold to more than $47,000. That effort was opposed by business leaders and Republicans and was struck down in the courts.

The rule will be effective July 1 and officials estimate the first year of implementation will cost employers $1.4 billion. 

“The Department of Labor is ensuring that lower-paid salaried workers receive their hard-earned pay or get much-deserved time back with their families,” Jessica Looman, the Labor Department’s wage and hour administrator, said in a statement. “This rule establishes clear, predictable guidance for employers on how to pay employees for overtime hours and provides more economic security to the millions of people working long hours without overtime pay.”

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