Today, the U.S. Department of Labor published the final rule to raise the salary threshold for exemption from overtime pay.
“We are thrilled to see the final rule issued to update overtime protections under the Fair Labor Standards Act. This action is projected to give overtime protections to 4.3 million workers and increase the wages of working people by $1.5 billion annually. Further, the rule is an important step toward correctly valuing one of the most precious resources workers have—their time,” said EPI President Heidi Shierholz. “This rule is an essential milestone in creating a stronger, fairer economy.”
When the rule is fully phased in—which will happen over the next eight months—salaried workers making less than $1,128 per week ($58,656 per year for a full-time, full-year worker) would become automatically eligible for overtime pay at a rate of time and a half when they work more than 40 hours in a week, even if they are a manager, supervisor, or highly credentialed professional (also called an EAP employee). The final rule will also automatically update the threshold every three years to ensure that the threshold’s protection does not diminish as prices and wages in the economy rise.
The overtime threshold has not been properly updated for nearly 50 years, leaving millions of workers who should be covered without basic overtime protections under the Fair Labor Standards Act. Currently, a worker making just $36,000 a year can be required to work 50- or 60-hour work weeks with no additional pay. This proposal would ensure that employers have “skin in the game” when they ask these workers to work long hours. And as a result, these workers will either get those extra hours back or they will get higher wages when they do work long hours—whether through salary increases or by earning time-and-a-half overtime pay.
As former Chief Economist at the U.S. Department of Labor from 2014–2017, Shierholz worked closely on the Department’s economic impact analysis for the 2016 overtime regulations that would have extended and strengthened overtime protections for millions of workers. Unfortunately, that regulation was first challenged in court by both conservative state attorneys general and by the business lobby, overturned by a Texas district court judge, and then was ultimately replaced by a weaker standard under the Trump administration.
Read EPI’s latest analysis and public comment in support of the proposed version of the new rule.