Sunita Somvanshi
The Biden administration has finalized a new rule that will make millions more salaried workers eligible for overtime pay in the U.S. This measure marks the largest expansion in federal overtime eligibility seen in decades. Starting July 1, employers will have to pay overtime to salaried workers earning less than $43,888 a year in certain executive, administrative, and professional roles, the Department of Labor announced on Tuesday. This limit will increase to $58,656 at the beginning of 2025.
“Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable,” said Acting Secretary of Labor Julie Su in a prepared statement. She added that the administration was “following through on our promise to raise the bar for workers who help lay the foundation for our economic prosperity.”
This change marks a significant increase from the current threshold of $35,568 set in 2019 during the Trump administration, just three years after a more generous effort from the Obama era was ultimately sunk in court after facing opposition from some business leaders and Republican politicians. The current annual threshold of $107,432 for highly compensated workers will increase to $132,964 on July 1 and to $151,164 at the beginning of 2025.
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The Department of Labor estimates that 4 million lower-paid workers who are currently exempt under current regulations will be eligible for overtime protections in the first year under the new rule. Another 292,900 higher-paid workers are also expected to become eligible for overtime. The increases on July 1 update the current salary thresholds using the methodology implemented under the Trump administration’s 2019 regulation. The new rule’s methodology will take effect on January 1, said the Department of Labor, and salary thresholds will be updated every three years based on the latest wage data.
The Biden administration first announced plans for its new rule at the end of August, and introduced a proposal in September. The Department of Labor said it has ” conducted extensive engagement with employers, workers, unions and other stakeholders” and considered more than 33,000 comments while developing the final rule. Critics have argued that the new regulation could burden businesses with new costs and add to ongoing labor challenges. In a statement, U.S. Representative Virginia Foxx, a Republican from North Carolina and chair of the House Education and Labor Committee, said that employers “are staring down the barrel of billions in annual costs to comply with the rule” and called the regulation “excessive and heavy-handed.”
Meanwhile, its supporters praised the administration’s governance, and some pointed out that such a measure was already necessary. The left-leaning Economic Policy Institute says the overtime threshold has not been properly updated for nearly 50 years, leaving millions without such federal protections. “The rule is an important step towards properly valuing one of the most precious resources workers have: their time,” said Heidi Shierholz, president of the EPI, on Tuesday. “This rule is an essential milestone in creating a stronger and fairer economy.
