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More office workers will be paid overtime.
CNN
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Millions of salaried workers will soon be eligible for overtime pay under a final rule released Tuesday by the U.S. Department of Labor.
The new rules increase the salary threshold for salaried workers to qualify for overtime by two levels. Starting July 1, this threshold will increase to $43,888 ($844 per week), equivalent to an annual salary, and increase to $58,656 ($1,128 per week) on January 1, 2025.
The agency estimates that about 4 million more workers will be eligible for overtime when the rule fully takes effect in January. The rule is expected to result in approximately $1.5 billion in income transfers from employers to workers in the first year, primarily due to new overtime premiums and increased compensation for some affected employees. This is due to salary increases to maintain exempt status.
“This rule restores the promise to workers that if they work more than 40 hours in a week, they must be paid more for those hours,” the Labor deputy said. Commissioner Julie Su said in a statement. “Low-wage salaried workers often do the same work as hourly workers but spend more time away from their families without additional pay. That’s unacceptable. is.”
The current standard is $35,568 per year, or $684 per week, and was established by the Trump administration in 2019.
According to the agency, the salary standard amount will be updated every three years starting July 1, 2027.
Business groups are expected to resist this effort, as they did successfully when the Obama administration attempted to significantly raise the threshold. When the latest proposed rules were released in August, industry groups immediately pushed back against them, saying they would increase costs for members and negatively impact operations.
Ted Hollis, a partner at law firm Quarles & Brady, said: “These large price increases are particularly burdensome for many small businesses, who are forced to choose between cutting some jobs and raising prices. “Is that so?” he said. “Some businesses that are unable to do either may be forced to close, thereby potentially having unintended but predictable side effects of this government action.”
Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, said in a statement that the rule “dramatically increases operating costs” for small restaurant owners who are “trying desperately” to maintain menu prices. “It will be increased,” he said.
“And because the DOL created a one-size-fits-all rule based on national income data rather than regional data, this change will disproportionately impact restaurant owners in the South and Midwest.”
Ben Brubeck, vice president of regulatory, labor and government affairs at the Associated Builders & Contractors, said the rule would cause confusion throughout the construction industry, and the trade group is not prepared to pursue any legal challenges, including legal challenges. He said he would consider his options. The rule “drastically limits employees' flexibility in scheduling and setting hours in the workplace and undermines opportunities for career advancement,” he said in a statement.
In 2016, then-President Barack Obama asked the Department of Labor to overhaul federal overtime rules and raise the salary threshold to $47,476 a year, or $913 a week. This is approximately double the level at the time.
But business groups and 21 states filed suit, and a federal judge in Texas issued an injunction later that year. The Trump administration said in 2017 that it would not defend the rule, and then raised the threshold to its current level.
This story has been updated with additional information.