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The Labor Department’s proposed rule would guarantee overtime pay for far more non-hourly workers, raising the threshold to benefit such workers earning less than $55,000 a year.
“Today, the Biden-Harris administration is proposing a rule that would help restore workers’ economic security by giving millions more salaried workers the right to overtime protections,” acting labor secretary Julie Su said in a statement.
The rule would boost wages for many workers in low-wage but salaried occupations — including in hospitality, manufacturing and retail — making them eligible for time-and-a-half pay after working more than 40 hours in a week. For example, a salaried restaurant supervisor or clerical worker who makes more than $35,568 but less than $55,000 would now be eligible for overtime pay. The proposed change stands to boost the finances of millions of the country’s most vulnerable workers, including women, people of color, and workers without college degrees.
In another major change, the rule would include automatic updates to the salary level for overtime eligibility every three years based on wage data.
The proposed rule resurrects an Obama-era policy that significantly raised the threshold for exempting salaried workers from overtime benefits, and also indexed the salary cutoff to future wage growth. That rule was scrapped by the Trump administration in favor of a rule with a far lower threshold in 2019.
The Biden administration is touting its long-awaited new rule as part of its “Bidenomics” plan to rebuild the middle class. As part of this agenda, the administration has been taken action to raise wages for workers on federal projects and revive manufacturing jobs by investing in green energy projects and semiconductor manufacturing.
Sharon Block, a labor law professor at Harvard Law School, who led the Obama administration’s efforts to increase overtime benefits, said in a statement that the Biden administration’s proposed rule demonstrates “the fact that elections have consequences.”
“The consequence of the Trump administration was that millions of workers lost the right to a fair wage and the consequence of the Biden administration is that millions of workers will regain that right,” Block said.
The rule is likely to face fierce opposition and legal challenges. The Associated Builders and Contractors, a construction industry trade group, said Wednesday it was “disappointed” that the Labor Department is pursuing the rule as businesses continue to grapple with labor shortages and inflationary pressures.
The National Association of Manufacturers also raised concern earlier this month about increasing the threshold for overtime exemptions due to the hardship it would place on employers, and has said it would consider taking legal action.
Some 300,000 more manufacturing workers would be eligible for overtime pay under the new rule, according to the Labor Department.
Calling the rule “incremental,” Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, applauded the bill, but said in a statement that it did not go far enough to help working families. The caucus has called for the threshold to be raised to salaried workers who earn less than $80,000 a year.
The rule now enters a 60-day comment period before it is finalized.
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