The U.S. Department of Labor (DOL) has recently shared an overtime proposal that could have far-reaching implications for salaried employees and their employers. In this blog post, we will explore the key details of this proposal, including the new overtime threshold, its potential impact, and what lies ahead.

The Proposed Overtime Threshold

The DOL is suggesting a substantial adjustment to the overtime threshold for salaried employees. Currently, the overtime threshold is set at $35,568 per year, this has not increased since 2020. The proposed new threshold would raise the bar significantly, increasing it to $55,068 annually. This represents a 55% increase, adding $19,500 to the federal salary threshold.

What the New Threshold Means for Salaried Workers

Under the proposed changes, salaried employees earning up to $55,068 per year would be entitled to overtime pay at a rate of 1.5 times their normal earnings for any hours worked beyond the standard 40-hour workweek. This adjustment aims to provide fair compensation to more workers who put in additional hours.

“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,” said Acting Secretary of Labor Julie Su. “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 Cost Estimate

The DOL estimates that implementing this new threshold would result in a substantial “Year 1 income transfer” of approximately $1.2 billion from employers to employees. This projection underscores the significance of the proposed change in overtime regulations.

Congressional Support for Overtime Increases

Notably, leading Congressional Democrats have been advocating for federal overtime increases for some time. The Restoring Overtime Pay Act of 2023 is one such initiative that seeks to raise the threshold to $75,000 per year by 2026, indicating ongoing efforts to ensure fair compensation for workers as inflation continues to increase. 

What Comes Next?

This proposed rule is not yet enacted. Next, the DOL will host briefings on the proposal in the coming weeks, providing a platform for further discussion and clarification. The DOL’s proposal for a new overtime threshold for salaried employees represents a shift in labor regulations in favor of the employee. As stakeholders weigh in and discussions progress, the landscape of overtime pay in the United States is likely to change.

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