BIDEN'S EXPANSION OF OVERTIME PAY ELIGIBILITY TO BENEFIT 4 MILLION WHITE-COLLAR WORKERS

The Biden administration introduced a new regulation Tuesday aimed at extending overtime pay eligibility to millions of white-collar workers.

Effective July 1, the rule raises the threshold for executive, administrative, and professional employees exempt from overtime pay from $35,568 to $43,888, making approximately 1 million additional workers eligible for time-and-a-half compensation for hours worked beyond 40 per week.

Furthermore, starting January 1, the threshold will increase to $58,656, encompassing an additional 3 million workers.

Acting Labor Secretary Julie Su stated that the rule aims to uphold the principle that workers should be compensated for overtime work. The move aligns with President Biden's commitment to improving wages for low- and middle-class Americans and comes amid longstanding efforts to raise the federal minimum wage.

The initiative responds to the aftermath of the pandemic, which heightened burnout among workers and spurred demands for better work-life balance. The Labor Department's proposal to raise the salary threshold garnered substantial public feedback, resulting in adjustments to the final rule.

While hourly workers are entitled to overtime pay, salaried employees meeting certain criteria are exempt. Industry groups may challenge the new standard, arguing that it imposes excessive regulatory burdens on businesses.

The rule's implementation could prompt various responses from employers, including adjusting salaries, reclassifying employees, or limiting work hours. Some companies may opt to elevate workers' base pay to the new threshold, while others might convert salaried employees to hourly status. Additionally, adjustments to employees' schedules and compensation may occur to mitigate the impact of the rule.

In 2016, the Obama administration proposed a similar increase in the overtime salary threshold, which was later invalidated by a federal court. The Trump administration subsequently set the current threshold at $35,568.

In a statement, the Labor Department said it's confident the new standard can better withstand a legal challenge because it's notably lower than than the 40th percentile benchmark set by the Obama administration.

"This is a meaningful methodology change that addresses potential concerns that the salary level test should not play an outsized role in relation to the duties test," Labor said.

The Labor Department also said it raised the threshold for “highly compensated” employees who only need to perform one of the duties of executive, administrative or professional workers to be exempt from overtime. That benchmark will rise from $107,452 to $151,164 by January.

Starting July 1, 2027, the rule requires Labor to adjust the salary threshold every three years to account for updated wage data.

2024-04-24T10:27:58Z dg43tfdfdgfd