President Joe Biden's administration is set to propose a new rule setting up millions more U.S. workers eligible for overtime pay under the Fair Labor and Standards Act.
According to copies of the proposed rule distributed to media outlets Wednesday, the Department of Labor will require employers to pay time-and-a-half to salaried workers making less than $55,000 a year—a number significantly higher than the $35,568 established under the Trump administration in 2019.
"For over 80 years, a cornerstone of workers' rights in this country is the right to a 40-hour workweek, the promise that you get to go home after 40 hours or you get higher pay for each extra hour that you spend laboring away from your loved ones," Acting Labor Secretary Julie Su said in a statement DOL officials provided to Newsweek. "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."
The policy is anticipated to cover some 3.6 million workers nationwide and will apply to employees of enterprises that have an annual gross volume of sales made or business done of $500,000 or more. However, employees of certain businesses like hospitals, nursing homes, schools and government agencies will also be covered under the rule, according to a DOL fact sheet.
The policy marks a reprise of a policy passed under Barack Obama which proposed a doubling of the salary threshold for overtime pay from a little over $23,000 per year to $47,476 a year, resulting in millions more employees inside the United States becoming eligible for overtime pay.
However, that rule change was later blocked by Obama-appointed U.S. District Judge Amos Mazzant III in 2016 after arguments that the new overtime rules would have caused an uptick in government expenditures and made it mandatory for businesses to pay millions in additional salaries to keep their employees above the overtime-exempt threshold, potentially resulting in layoffs.
Newsweek has reached out to the Department of Labor for comment on the law's ability to survive a similar court challenge—particularly given the fact that, according to initial reports, the proposed Biden policy seeks to go a step further than Obama did.
In addition to the threshold increase, the proposed rule will also include automatic increases to the salary level each year, a significant shift from the standing policy.
While some experts previously argued the Trump policy was only successful because of the relatively small increase to the overtime rule, labor groups in recent years have been pushing for a change to the rule in light of rising inflation, which has left workers with set wage schedules with stagnant wages regardless of their productivity.
And in recent years, an increasing body of evidence has shown federal salary rules have been increasingly exploited in attempts to pay workers less.
According to findings in a January 2023 working paper published by the National Bureau of Economic Research, researchers found "widespread evidence of firms appearing to avoid paying overtime wages" by exploiting a federal law that allows them to label rank-and-file employees as "managers" while keeping them below the federal wage threshold, allowing them to dodge paying overtime to workers they might otherwise be required to.
From 2010 to 2018, researchers found so-called manager titles on common job boards were nearly five times as common among workers who were at the federal salary cutoff for mandatory overtime, allowing firms to avoid approximately 13.5 percent in overtime expenses for each strategic "manager" hired over that eight-year period.
One example researchers cited was at the bargain store Dollar General, where a 2008 class action lawsuit determined so-called "store managers" spent most of their 60-to-90-hour weekly shifts performing manual labor tasks with no relation to traditional management duties, including tasks such as "stocking shelves, running the cash registers, unloading trucks, and cleaning the parking lots, floors and bathrooms."
And according to researchers, such violations are quite common, with wage theft violations ranking among the top corporate violations after workplace safety violations. And of those, overtime violations were the most significant.
"Based on enforcement data from the Department of Labor, between 2010 and 2021, about 73 percent of wage theft violations that resulted in fines or back-wages contained overtime-related charges, and back-wages owed for overtime accounted for over 80 percent of the total back-wages and fines," researchers claimed.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Nick Reynolds is a senior politics reporter at Newsweek. A native of Central New York, he previously worked as a ... Read more
