Department of Labor Issues New Overtime Affecting Millions of Workers

The U.S. Department of Labor unveiled a new rule on Tuesday that is set to expand the eligibility for overtime pay to a larger portion of the American workforce.

The rule, effective July 1, will require employers to pay overtime to workers earning up to $43,888 per year, a significant increase from the previous threshold of $35,568. Furthermore, the salary cap will be raised to $58,656 starting Jan. 1, 2024.

Acting DOL Secretary Julie Su emphasized the importance of this change, stating, “This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time.” Su also highlighted the disparity between lower-paid salaried workers and their hourly counterparts, who often perform similar duties but spend more time away from their families without receiving additional compensation.

However, the new overtime rule has faced criticism from small business advocates.

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Beth Milito, Executive Director of NFIB’s Small Business Legal Center, expressed concerns about the burden this change will place on small businesses. “Small businesses will need to spend valuable time evaluating their workforce to properly adjust salaries or reclassify employees in accordance with this complicated mandate,” Milito said.

She also pointed out that many small businesses lack the resources, such as legal teams or compliance officers, to easily implement these changes and may struggle to allocate extra funds for wage increases.

Despite the pushback, the Biden administration maintains that the rule will benefit workers by ensuring fair compensation for overtime hours and providing greater economic security.

Wage and Hour Administrator Jessica Looman stated, “This rule establishes clear, predictable guidance for employers on how to pay employees for overtime hours and provides more economic security to the millions of people working long hours without overtime pay.”

The new overtime rule is expected to impact millions of Americans and will likely face further scrutiny as its implementation date approaches.

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While the administration sees it as a necessary step towards protecting workers’ rights and ensuring fair compensation, small businesses worry about the potential financial and administrative burdens they may face in complying with the new regulations.