Around 3.6 million more U.S. workers may soon be eligible for overtime pay, according to a new proposal from the Biden administration. This expansion of overtime eligibility would be the most generous increase in decades. Here’s what to know about how overtime works right now, and how this new rule could change your life (and bank account) for the better.
The current state of overtime pay
Generally speaking, overtime pay applies to hourly workers who log more than 40 hours in one week. As we’ve previously explained, the potential for overtime pay is one of the few perks for wage workers over salaried employees. (Unfortunately, many salaried or non-hourly workers are similarly underpaid and overworked, but without the potential to earn overtime.)
The proposed rule from the Biden administration, unveiled by the Department of Labor (DOL) last week, would give “millions more salaried workers the right to overtime protections if they earn less than $55,000 a year” (alternatively, less than $1,059 per week). That salary threshold is an increase from the current minimum of $35,568.
For context, around 15% of salaried workers are currently entitled to overtime pay; the proposed rule would basically double that percentage, according to the AP. This expansion would have a huge impact on all the low-paid salaried workers who have long been denied overtime pay despite working long hours and earning equivalent wages as their hourly counterparts.
How the proposed rule would work
Here’s a closer look at what exactly the proposed rule would do, per the DOL:
“Restore and extend overtime protections to low-paid salaried workers.” This is the big one. Because of outdated and out-of-sync rules, many low-paid salaried workers aren’t getting paid overtime like their hourly counterparts. With the new proposed salary level, more low-paid salaried workers would receive the overtime protections they deserve.
“Give workers who are not exempt executive, administrative or professional employees valuable time back.” The proposed rule would protect workers by more clearly defining who is and is not exempt from overtime.
“Prevent a future erosion of overtime protections and ensure greater predictability.” Under the new rule, the salary threshold will automatically update every three years to more accurately reflect up-to-date earnings data.
“Restore overtime protections for U.S. territories.” This rule would return to a previous practice that ensured the overtime salary threshold in U.S. territories where the federal minimum wage was applicable.
The bottom line
The change could have a big impact if you’re a low-paid salaried worker earning less than $55,068. If approved, the new rule wouldn’t take effect for some months. For now, we’re in a 60-day holding period during which the proposed rule is open for public comment. (The 60-day countdown began Aug. 30.) The DOL says it will consider all comments received before publishing a final rule. Learn more about the proposed rule and instructions for submitting comments here.