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1 Million More Workers Just Became Eligible for Overtime Pay
By Pete Grieve MONEY RESEARCH COLLECTIVE
They’ll now be entitled to one-and-a-half times pay for time they put in over the standard 40-hour week.
A new federal overtime pay rule went into effect Monday, expanding the protections to and earnings potential for about 1 million salaried workers.
U.S. government officials have said that the overtime expansion, one of the largest in recent history, means more workers will now be compensated for the extra hours they spend at work and away from their families. An estimated 4 million people will benefit from the changes to overtime pay once they’re fully in effect come 2025. Specifically, they’ll now be entitled to one-and-a-half times pay for time they put in over the standard 40-hour week.
Announced in April, the Department of Labor’s rule change affects the exemption criteria for overtime pay. This overtime exemption — the executive, administrative or professional (“EAP”) exemption — applies when employees performs certain job duties and have higher salaries.
The salary threshold to be “exempt” just jumped from $35,568 per year to $43,888. With a higher threshold for exemption, more workers are entitled to 1.5 times pay for overtime work. (Alternatively, employers could raise salaries to ensure employees remain exempt under Fair Labor Standards Act rules.)
The threshold is scheduled to increase again on Jan. 1 to $58,656, which will benefit 3 million more people, according to the White House.
Who’s eligible for overtime pay
The change that took effect on Monday means that most workers who make under $844 per week should get overtime pay. Barring legal setbacks, that amount will go up to $1,128 per week next year.
The Biden administration says stronger overtime laws lift up the country’s middle class. Overtime rules “were established to protect workers from exploitation and to benefit workers, their families and our communities” by ensuring folks aren’t overworked and underpaid, according to a blog post from the Department of Labor. But the salary threshold hadn’t been adjusted in recent decades to keep up with wage increases, which it said “caused an erosion of the real value of the salary threshold.”
In the future, the thresholds will increase on a regular schedule every three years.
However, the overtime change faces legal challenges in Texas that could affect implementation. Last week, a federal judge temporarily blocked the rule from taking effect for state employees in Texas. The judge wrote that the federal government’s changes to overtime rules under this law must based on job duties not wages alone.
In 2016, the same court struck down a similar attempt at overtime pay expansion but did so at a national level. Opponents of the expansion of this new slate of overtime protections are hoping that will happen again.
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Pete Grieve is a New York-based reporter who covers personal finance news. At Money, Pete covers trending stories that affect Americans’ wallets on topics including car buying, insurance, housing, credit cards, retirement and taxes. He studied political science and photography at the University of Chicago, where he was editor-in-chief of The Chicago Maroon. Pete began his career as a professional journalist in 2019. Prior to joining Money, he was a health reporter for Spectrum News in Ohio, where he wrote digital stories and appeared on TV to provide coverage to a statewide audience. He has also written for the San Francisco Chronicle, the Chicago Sun-Times and CNN Politics. Pete received extensive journalism training through Report for America, a nonprofit organization that places reporters in newsrooms to cover underreported issues and communities, and he attended the annual Investigative Reporters and Editors conference in 2021. Pete has discussed his reporting in interviews with outlets including the Columbia Journalism Review and WBEZ (Chicago's NPR station). He’s been a panelist at the Chicago Headline Club’s FOIA Fest and he received the Institute on Political Journalism’s $2,500 Award for Excellence in Collegiate Reporting in 2017. An essay he wrote for Grey City magazine was published in a 2020 book, Remembering J. Z. Smith: A Career and its Consequence.