The Biden administration announced a proposed rule on Wednesday that would extend overtime pay to 3.6 million more salaried workers.
The Labor Department’s proposed rule would require that businesses pay overtime to salaried white-collar workers who earn less than $55,000 annually. Currently, salaried workers earning $35,568 a year are entitled to overtime, so the rule would raise the eligibility threshold by about $20,000.
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The covered workers include salaried, managerial, executive, administrative, and professional employees, which have different federal overtime standards than hourly employees.
“Today, the Biden-Harris administration is proposing a rule that would help restore workers’ economic security by giving millions more salaried workers the right to overtime protections if they earn less than $55,000 a year,” said acting Labor Secretary Julie Hu. “Workers deserve to continue to share in the economic prosperity of Bidenomics.”
The majority of hourly employees are already entitled to overtime pay if they work in excess of 40 hours per week, although most salaried white-collar workers are not.
The increase would apply to an estimated 3.6 million workers, according to the administration. It will have the most profound effects on managerial workers in industries such as retail, which might have salaried workers in management positions who still earn below that $55,000 limit.
Additionally, the rule would automatically adjust the annual salary threshold every three years to reflect current earnings data.
The proposed rule has some major opponents, including businesses that fear the change could further exacerbate the financial challenges facing their companies by straining payrolls amid the worst bout of inflation in decades.
Associated Builders and Contractors, the trade association representing the nonunion construction industry, said in a statement that it was disappointed in the announcement, noting that the group has been calling on the administration to hold off on changes to the salary threshold until the current economic situation stabilizes.
“ABC is disappointed that the DOL is moving forward with a proposed overtime rule since multiple industries, like construction, are still grappling with the lingering economic consequences of inflation, global supply chain disruptions, rising materials prices and workforce shortages, all of which push operational costs ever higher,” said Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor, and state affairs.
The overtime salary threshold was last updated under the Trump administration in 2019. The threshold was increased to its current level of just over $35,000 from $23,660.
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While the rule is sure to disappoint business groups, it might also disappoint some on the Left who had been pushing for the Biden administration to raise the threshold for white-collar overtime even higher than $55,000.
A group of Democratic lawmakers, including Sen. Sherrod Brown (D-OH), ranking member of the Banking Committee, sent a letter to the Labor Department in 2021 pushing for the threshold to be raised to nearly $83,000 by 2026.