More than 3 million workers would be newly eligible for overtime pay when they work more than 40 hours a week, under a new proposal from the US Department of Labor.
(Bloomberg Law) — More than 3 million workers would be newly eligible for overtime pay when they work more than 40 hours a week, under a new proposal from the US Department of Labor.
The highly-anticipated proposed rule, announced Wednesday by the Biden administration, would expand time-and-a-half pay protections to more workers by changing the exemptions to overtime eligibility under the Fair Labor Standards Act.
Workers who are salaried, make more than a certain amount of money per year, and work in a “bona fide executive, administrative, or professional capacity” aren’t covered by requirements for employers to pay employees at a time-and-a-half rate for any time they work beyond 40 hours in a week. Employees must meet all three of these factors for the exemption to apply.
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The Biden administration proposal would raise the salary piece of the test to ensure workers making less than about $55,000 annually are automatically owed overtime pay, a bump from the current level of $35,568. The change is expected to provide an additional 3.6 million workers with the right to time-and-a-half pay whenever they work more than 40 hours a week, according to the DOL.
Business groups that would see increased payroll costs under the rule change are expected to challenge the final version of the measure, especially given potential guardrails set by previous litigation involving past overtime regulations.
An effort by the Obama administration to raise the salary threshold of the overtime test to $47,476, which would have offered new overtime protections to millions, was blocked in federal court in 2017. The Texas-based US district court found that the Obama-era salary threshold was set so high it made the job duties piece of the exemption test irrelevant, and expanded protections to workers Congress sought to exclude.
That ruling could be used as ammunition against the latest proposal from the Biden administration, if a court could similarly be convinced that the new threshold crowds out other parts of the test. The DOL’s latest proposal doesn’t include any major changes to the job duties provisions.
The proposal is likely to be met with praise from Democrats and worker advocates who had been pressing the administration to expand overtime protections to more workers, but doesn’t go as far as setting the salary threshold to $82,732 as some had suggested.
Once the proposal is officially published in the Federal Register, the public will have 60 days to submit input on the potential changes.
To contact the reporter on this story: Rebecca Rainey in Washington at rrainey@bloombergindustry.com
To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Genevieve Douglas at gdouglas@bloomberglaw.com
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