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Millions more workers will be eligible for overtime pay under the Biden administration’s final rule

Millions of salaried workers will soon be eligible for overtime pay, according to a final rule released Tuesday by the U.S. Department of Labor.

The new rule raises the salary threshold below which employees are entitled to overtime in two stages. The threshold will increase to the equivalent of an annual salary of $43,888, or $844 per week, starting July 1, then to $58,656, or $1,128 per week, on January 1, 2025.

About 4 million more workers will be eligible for overtime when the rule is fully implemented in January, the agency estimates. In its first year, the rule is expected to result in an income shift of about $1.5 billion from employers to workers, mostly in the form of new overtime bonuses or wage increases aimed at maintaining status. exemption of certain employees concerned.

“This rule will restore the promise to workers that if you work more than 40 hours a week, you should be paid more for that time,” Acting Labor Secretary Julie Su said in a statement. “Too often, the lowest paid salaried workers do the same work as their hourly counterparts, but spend more time away from their families without additional pay. This is unacceptable.

The current threshold is $35,568 per year, or $684 per week, and was put in place by the Trump administration in 2019.

The salary threshold will be updated every three years, starting July 1, 2027, specifies the agency.

Business groups are expected to oppose the move, as they successfully did when the Obama administration tried to significantly raise the threshold. Trade associations quickly rejected the latest proposed rule when it was released in August, saying it would increase costs for their members and hurt their operations.

“I suspect such substantial increases could pose a particular burden to many small businesses, forcing some to choose between cutting jobs and raising prices,” said Ted Hollis, a partner at Quarles & Brady, a law firm. “Some businesses that can do neither could be forced to close their doors, leading to unintended but predictable side effects of this government action.” »

The rule will “exponentially increase” operating costs for small restaurateurs who are “desperately trying” to keep menu prices stable, Sean Kennedy, executive vice president of public affairs for the National Restaurant Association, said in a statement .

“And because the DOL created a single rule based on national income data, rather than regional data, this change is going to have a disproportionate impact on restaurant operators in the South and Midwest,” he said .

Ben Brubeck, vice president of regulatory, labor and state affairs at Associated Builders and Contractors, said the rule would disrupt the entire construction industry and noted that the trade group would review all options, including including a legal challenge. The rule “will significantly restrict employees’ workplace flexibility in setting hours and schedules, thereby harming opportunities for career advancement,” it said in a statement.

In 2016, President Barack Obama directed the Department of Labor to revise federal overtime rules and raise the salary threshold to $47,476 per year, or $913 per week. This would have roughly doubled the level in effect at the time.

But business groups and 21 states sued, and later that year a federal judge in Texas issued an injunction. The Trump administration said in 2017 that it would not defend this rule and later raised the threshold to the current level.

This story has been updated with additional information.

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