The Biden administration proposed a major expansion of federal overtime protections on Wednesday in a new rule that could hand a raise to millions of workers across the country ahead of Labor Day next week.
The Department of Labor is proposing raising the threshold under which salaried workers are guaranteed overtime pay from its current level of $35,568 to $55,000 a year. Crucially, the proposed rule would automatically raise the salary threshold every three years, ensuring the longevity of protections even under different presidential administrations.
The rule, if finalized, would allow 3.6 million more workers to access overtime protections. The agency estimates that wages for these workers would increase by a collective $1.3 billion.
“For over 80 years, a cornerstone of workers’ rights in this country is the right to a 40-hour workweek, the promise that you get to go home after 40 hours or you get higher pay for each extra hour that you spend laboring away from your loved ones,” said acting Labor Secretary Julie Su.
“I’ve heard from workers again and again about working long hours, for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifices,” Su continued. “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.”
The new proposal means that more workers will be guaranteed overtime pay, at time-and-a-half, for work past 40 hours a week under the Fair Labor Standards Act. The Obama administration had attempted to raise the threshold to over $47,000, but the plan was shot down after business groups challenged the rule in court and Donald Trump replaced the plan with a rule raising the threshold to its current level in 2019.
Salaried workers over the threshold would still not be guaranteed pay for overtime work under the new rule. Most hourly workers are already granted overtime protections, regardless of salary level.
The new rule would raise the proportion of salaried workers guaranteed overtime pay from 15 percent, as estimated by the Economic Policy Institute, to 27 percent, according to labor officials.
Progressive and Democratic lawmakers have been calling for the Biden administration to raise the overtime salary threshold for years. A year ago on Wednesday, the Congressional Progressive Caucus issued a statement urging Biden to raise the overtime threshold to the 55th percentile of full time salaried workers, or $82,732, by 2026.
This would bring the threshold up to match and even exceed the salary limit of $5,200 that was originally set when it was first established in 1949 — a salary worth over $65,000 today.
Nonetheless, advocates have praised the proposed rule, saying that it will still benefit millions.
“The overtime threshold has not been properly updated for nearly 50 years, robbing millions of workers of their basic wage and hour rights under the Fair Labor Standards Act,” said Heidi Shierholz, Economic Policy Institute President and former chief economist at the Labor Department. “This proposal is a crucial step in creating a stronger, fairer economy.”
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