1 Million More Workers Just Became Eligible for Overtime Pay

 

A new federal overtime pay rule went into effect on Monday, expanding protections and earnings potential for about 1 million salaried workers.

U.S. government officials have stated that this overtime expansion, one of the largest in recent history, will ensure more workers are compensated for the extra hours they spend at work, away from their families. An estimated 4 million people are expected to benefit from these changes to overtime pay once they are fully implemented by 2025. Specifically, workers will now be entitled to one-and-a-half times their regular pay for any hours worked over the standard 40-hour week.

Announced in April, the Department of Labor’s rule change affects the exemption criteria for overtime pay. This exemption, known as the executive, administrative, or professional (EAP) exemption, applies to employees performing certain job duties and earning higher salaries.

The salary threshold to be "exempt" has increased from $35,568 per year to $43,888. With this higher threshold for exemption, more workers are now entitled to 1.5 times pay for overtime work. Alternatively, employers could raise salaries to ensure employees remain exempt under the Fair Labor Standards Act rules.

The threshold is set to increase again on January 1 to $58,656, which will benefit 3 million more people, according to the White House.

Eligibility for Overtime Pay

The change that took effect on Monday means that most workers earning under $844 per week should receive overtime pay. Barring legal setbacks, that amount will increase to $1,128 per week next year.

The Biden administration argues that stronger overtime laws support the country’s middle class. According to a blog post from the Department of Labor, overtime rules were established to protect workers from exploitation and to benefit workers, their families, and communities by ensuring they aren't overworked and underpaid. However, the salary threshold had not been adjusted in recent decades to keep up with wage increases, leading to an erosion of the real value of the salary threshold.

In the future, the thresholds will increase on a regular schedule every three years.

The overtime change faces legal challenges in Texas that could affect its implementation. Last week, a federal judge temporarily blocked the rule from taking effect for state employees in Texas, stating that the federal government's changes to overtime rules must be based on job duties, not wages alone.

In 2016, the same court struck down a similar attempt at expanding overtime pay on a national level. Opponents of the new overtime protections are hoping for a similar outcome this time.