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The Biden administration is expanding overtime pay to cover 4.3 million more workers. Here’s who’s qualified.

New study finds work stress impacts health of more people


New study finds work stress impacts health of more people

05:42

About 4.3 million American workers who were previously ineligible for overtime pay could soon receive pay boosted by half for working more than 40 hours a week thanks to a new rule from the Biden administration.

The U.S. Department of Labor unveiled a new rule Tuesday that will extend overtime pay to employees earning less than $1,128 per week, or $58,656 per year. Previously, only workers who earned $684 or less per week, or $35,568 per year, were eligible for OT.

Companies are required to pay workers 1.5 times their salary if they work more than 40 hours per week, but this protection has been limited to hourly workers and low-income earners. Because of the wage reduction, many employees were performing the same tasks as their hourly colleagues but were unable to benefit from overtime, Acting Labor Secretary Julie Su said in a statement.

“This rule will give back to workers the promise that if you work more than 40 hours a week, you should be paid more for that time,” she said.

The new rule could result in a $1.5 billion pay increase for employees, according to an estimate from the Economic Policy Institute, a left-leaning think tank.

“Employers will be more than capable of adapting to the rule without negatively impacting the overall economy,” wrote EPI Director of Government Affairs and Advocacy Samantha Sanders and President Heidi Shierholz.

Here’s what you need to know about the new OT rule.

Why is overtime pay being revised?

The Fair Labor Standards Act requires that most workers who spend more than 40 hours per week on the job receive 1.5 times their regular wage for each hour worked above that amount.

While the law covers almost all hourly workers, salaried employees are only eligible for OT if they earn less than a specific wage. Currently, this threshold is $684 per week, or $35,568 per year.

This means that a salaried worker earning less than this threshold “may be required to work 60 to 70 hours per week for pay no higher than if he or she worked 40 hours,” Sanders and Shierholz write. “The 20 to 30 hours of overtime are completely free to the employer, allowing employers to exploit workers without any consequences.”

Who is covered by the new overtime rule?

The law covers salaried workers whose income is below certain thresholds and will come into force in two phases.

Starting July 1, salaried workers who earn less than $844 per week, or $43,888 per year, will be covered by the new rule. On January 1, 2025, the salary threshold will increase to $1,128 per week, or $58,656 per year, the Labor Ministry said.

Most of the additional workers who will now be eligible for occupational therapy work in professional and business services, health care and social services and financial activities, the EPI said. About 2.4 million of the 4.3 million workers are women, including 1 million of color, the release said.

Who will not qualify for the OT?

First, overtime pay is not available to employees who are considered “managerial, administrative or professional” employees.

Some researchers have pointed out that companies give fake titles to junior workers as “grooming manager” for a barber in order to make them appear as managers.

The new rule states that only “bona fide” managerial, administrative or professional employees are exempt from the expanded occupational therapy rule.

What are businesses saying about the new rule?

Some industry groups oppose the overtime rule, saying it would hurt their operations and lead to job cuts. Some also threaten legal action.

“We are concerned that many hoteliers will have no choice but to eliminate management positions that have long been avenues for advancement,” said American Hotel & Lodging Association (AHLA) interim president, Kevin Carey, in a press release. “AHLA is considering all available options, including litigation, to defeat this misguided regulation.”

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