Proposed Reform Aims to Expand Overtime Pay for Millions of Workers

As the summer season nears its end, we expect to see a rise in the number of workers returning to office spaces. The Biden administration has introduced a new proposal that could potentially benefit approximately 3.6 million additional workers by granting them eligibility for overtime pay. This proposal seeks to increase the cutoff for overtime earnings from the current level of $35,568 to $55,000 annually. The Department of Labor considers the existing system outdated as it fails to provide time-and-a-half pay to low-paid salaried employees who work more than 40 hours per week. Additionally, the proposed rule suggests updating the salary threshold for earning overtime every three years to align with current income data. This new proposal follows a previous update made four years ago, which increased the salary threshold to $35,568 annually, a 50% surge from the previous threshold of $23,660 per year. Recent research has indicated that some employers have employed strategies to minimize overtime pay, such as inflating workers' titles to avoid providing full payment for overtime work. Jessica Looman, the principal deputy wage and hour division administrator at the Labor Department, emphasized the need to rectify this injustice, stating, "For too long, many low-paid salaried workers have been denied overtime pay, even though they often work long hours and perform much of the same work as their hourly counterparts." Under the proposed rule, businesses would be required to pay salaried workers earning less than $1,059 per week (approximately $55,000 per year) time-and-a-half for overtime work. While the new rule is still subject to a public commentary period and would not take effect for several months, it would notably impact industries such as retail, food services, hospitality, manufacturing, and others where a significant number of managerial employees meet the revised threshold. Source: This information was adapted from a report by the Associated Press.