By Daniel Wiessner
(Reuters) – The administration of the US president Joe Biden on Tuesday unveiled a rule extending mandatory overtime pay to about 4 million workers, going even further than an Obama-era rule that was struck down by the courts.
The U.S. Department of Labor rule will require employers to pay overtime premiums to workers who earn less than $1,128 a week, or about $58,600 a year, when they work more than 40 hours a week .
The current salary threshold of about $35,500 a year was set by the Trump administration in a 2020 rule that worker advocates and many Democrats said did not go far enough.
The rule does not affect overtime requirements for hourly workers.
Julie Su, acting labor secretary and Biden’s nominee to fill the position permanently, said in a statement that the rule ensures that workers earn more money or are paid the same for working fewer hours.
“Too often, lower-paid salaried workers do the same work as their hourly counterparts, but spend more time away from their families without additional pay,” Su said.
Under the rule, the salary threshold will increase to $43,888 on July 1 and to $58,656 on January 1, 2025. And starting in 2027, the threshold will automatically increase every three years to reflect changes in average earnings.
U.S. wage law requires employers to pay eligible workers one and one-half times their regular rate of pay when they work more than 40 hours per week. Employees whose salary exceeds the salary threshold may still be entitled to overtime if they do not primarily perform management-related tasks.
Workers are generally automatically exempt if they earn wages above $107,432. The new rule will increase this threshold to approximately $151,000.
Several states, including California and New York, have salary thresholds for determining overtime eligibility that are higher than the current federal standard.
The Ministry of Labor doubled the salary threshold in 2016 to around $47,000. The following year, a federal judge in Texas said that cap was so high that it could leave some executives exempt from overtime protections, and he struck it down.
The new rule likely faces legal challenges, arguing that, like the Obama administration’s, it violates federal wage law by including many lower-paid supervisors and professionals who generally would not be eligible for hours additional.
Many major business groups have asked the department to delay any changes to overtime pay regulations, citing economic uncertainty and labor shortages that have increased operating costs for businesses.
“This rule…comes as many contractors continue to struggle in today’s unpredictable regulatory climate, grappling with persistent inflation, labor issues and high costs of goods,” said Michael Layman, senior vice president of the International Franchise Association, in a statement. .
And the rule could harm workers by pushing many companies to convert salaried jobs to hourly positions, reducing employee wages and eliminating some benefits, according to Rep. Virginia Foxx, Republican of North Carolina and chairwoman of a United States House of Representatives Labor Committee. .
“If the administration’s goal with this rule is to improve the standard of living for workers, then it is failing miserably,” Foxx said in a statement.
Meanwhile, unions, worker advocacy groups and many Democrats have supported the rule.
The AFL-CIO, the nation’s largest labor federation, in a statement welcomed the Biden administration’s decision to restore overtime protections that it said had been “gutted” by the Trump administration.
(Reporting by Daniel Wiessner in Albany, New York; editing by Aurora Ellis)
yahoo
