Some 3.6 million salaried workers would newly qualify for overtime pay under a proposed rule unveiled by the US Department of Labor on Wednesday. It would guarantee overtime pay of at least time-and-a-half for most salaried workers earning less than $1,059 a week, or about $55,000 a year.
The current threshold is $684 per week, the equivalent of roughly $35,600 a year, which was put in place by the Trump administration in 2019.
The proposed rule would transfer $1.2 billion in wages from employers to employees, mainly from new overtime premiums or pay raises to maintain the exempt status of certain affected employees, the agency said.
Also, the proposal would automatically update the salary threshold every three years so it keeps pace with earnings changes.
The effort would help ensure that more lower-paid salaried employees who work more than 40 hours a week receive the overtime protections given to hourly workers, the Labor Department said.
“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,” acting Labor Secretary Julie Su said in a statement.
Business groups are already pushing back on the proposal, as they successfully did when the Obama administration attempted to significantly hike the threshold.
The Associated Builders and Contractors said that it repeatedly asked the department to abandon or postpone the proposed rule until the economy stabilizes or improves.
“ABC is disappointed that the DOL is moving forward with a proposed overtime rule since multiple industries, like construction, are still grappling with the lingering economic consequences of inflation, global supply chain disruptions, rising materials prices and workforce shortages, all of which push operational costs ever higher,” Ben Brubeck, the group’s vice president of regulatory, labor and state affairs, said in a statement.
The National Restaurant Association also issued a dire warning. The proposed rule would increase costs for affected restaurants by 2.5% at a time when the average small business restaurant runs on a margin of 3% to 5%.
“Adding this kind of cost to the already high price of food and years of increasing labor costs will leave many of these operators in the untenable position of raising prices, cutting costs, or closing their doors,” Sean Kennedy, the association’s executive vice president of public affairs, said in a statement.
Reviving Obama-era effort
In 2016, then-President Barack Obama asked the Labor Department to overhaul federal overtime rules and raise the salary threshold to about $47,500 a year, or $913 a week. That would have roughly doubled the level that was in place 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 the rule and later lifted the threshold to the current level of roughly $35,600.