Biden Administration Proposes Rule Requiring Overtime Pay For Some Salaried Workers

The U.S. Department of Labor proposed a new federal rule Wednesday that would extend overtime pay protections to an additional 3.6 million salaried workers.

The rule would update the Fair Labor Standards Act to include workers who are paid a salary of less than $1,059 per week, or $55,000 each year. Under current regulations, which were last updated in January 2020, employees are exempt from the minimum wage if they are work in an executive, administrative or professional capacity, or make less than $684 per week ($35,568 annually.)

“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 Department of Labor Secretary Julie Su said in a news release. "

If the new rule is adopted, the salary threshold will be updated automatically every three years to reflect the most current wage data. The Labor Department's proposal also would apply the standard salary level to U.S. protectorates Puerto Rico, Guam, the U.S. Virgin Islands and the Commonwealth of the Northern Mariana Islands for the first time in four years.

In 2019, the department set a separate salary level of $455 per week for those territories. The same rule that included that new salary rate also elevated the standard rate for the U.S. mainland to $684 per week from $455.

The current proposed rule would increase the special salary rate for workers in American Samoa and the motion picture industry to $890 per week and $1,617 per week, respectively. Special rates are used by the U.S. Office of Personnel Management to increase recruitment in areas that are "handicapped" by undesirable working conditions or remoteness, according to the OPM.

The Labor Department estimates that the new rule would cost employers $1.2 billion, including nearly $535 million in managerial costs and $240 million in adjustment costs. The department also claims the proposal could increase worker productivity, reduce employee turnover and increase workers' personal time.

“Massive increases in labor costs like this simply cannot be absorbed by businesses," said Josh Ulman, spokesman for the Partnership to Protect Workplace Opportunity, said in a news release. "Meanwhile, automatic increases are unlawful and will set up the economy for failure, as increases will occur regardless of economic circumstances, exacerbating any problems that may exist."