What Proposed Change in Overtime Salary Threshold Means for Employers
A proposed rule change put forth this week could update overtime pay rules for U.S. workers.
Wednesday, the U.S. Department of Labor unveiled a plan to raise the threshold for which workers are entitled to receive overtime pay.
Under the current rule, employers may exempt certain employees from receiving overtime pay (time and a half for any hours worked above 40 per week) by classifying them as managers or exempt employees. However, only employees earning less than $35,568 annually can be exempt. Employers are required to pay standard time and a half overtime to employees earning an annual salary greater than $35,568.
The Biden Administration now proposes raising that threshold salary to $55,000, opening the door for an estimated 3.6 million workers to collect overtime pay. However, any change in the law is months away from implementation. The proposal will have to survive a regulatory review as well as a 60-day public comment period and could face court challenges.