The US Department of Labor has released a final rule that will soon qualify millions of salaried workers for overtime pay. The new rule increases the salary threshold for overtime eligibility in two stages, starting on July 1 and then again on January 1, 2025. Once fully implemented in January, an estimated 4 million more workers will qualify for overtime, resulting in a transfer of about $1.5 billion from employers to workers in the first year alone. Acting Labor Secretary Julie Su stated that the rule will ensure that workers are paid for their time when working more than 40 hours in a week.
Currently, the salary threshold for overtime eligibility is $35,568 a year, or $684 per week, set in place by the Trump administration in 2019. The new rule will increase this threshold, and it will be updated every three years starting July 1, 2027. Business groups are expected to fight against the new rule, citing concerns about the impact on their costs and operations. There are fears that smaller businesses may be particularly burdened, potentially leading to job cuts, price raises, or even business closures as a result of the increased costs associated with the new rule.
The Obama administration had previously attempted to raise the salary threshold for overtime eligibility to $47,476 a year, or $913 a week in 2016. However, this was met with opposition from business groups and 21 states, leading to a federal judge in Texas issuing an injunction against the rule. The Trump administration later decided not to defend the rule and lifted the threshold to the current level. With the new rule set to take effect, it is expected that trade associations and business groups will once again push back against the changes.
Overall, the final rule released by the Department of Labor will have a significant impact on salaried workers in the US, ensuring that more individuals are fairly compensated for their overtime work. While the rule is aimed at providing greater protection and benefits for workers, there are concerns within the business community about the potential negative consequences of the increased salary threshold for overtime eligibility. It remains to be seen how this new rule will be implemented and what effects it will have on both workers and employers in the coming years.
