The move by the Department of Labor comes more than eight years after the Obama administration embarked upon a similar effort to boost wages by rewriting overtime eligibility rules under the Fair Labor Standards Act.
Workers making less than about $55,000 annually would be automatically entitled to time-and-a-half pay under DOL’s proposal, up from $35,568 set in 2019 under former President Donald Trump. The Obama-era plan initially proposed setting a $50,440 floor before settling on $47,476 annually — though a federal judge in Texas blocked the rule from taking effect.
DOL estimates that the change would result in higher wages for 3.6 million workers.
“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 release. “Workers deserve to continue to share in the economic prosperity of Bidenomics.”
Under the FLSA, employers must show that a worker is salaried, makes at least a certain amount of money and works in a “bona fide executive, administrative or professional capacity,” in order to be exempt from hourly overtime requirements.
The Biden proposal, if finalized, will likely face similar legal arguments to the ones presented against the Obama overtime rule. In that case, Judge Amos Mazzant ruled that DOL exceeded its authority by raising the salary threshold so drastically that it “effectively eliminates” the third part of that test.
Employer groups, whose members would likely see increased labor costs as a result of DOL’s proposed policy, quickly lined up in opposition.
“Massive increases in labor costs like this simply cannot be absorbed by businesses,” the Partnership to Protect Workplace Opportunity said in a statement. “It will reduce opportunities, especially for recent graduates and younger professionals hoping to begin their careers.”
DOL’s proposal also includes a mechanism to update the salary threshold every three years by linking it to the 35th percentile of income. The 2016 proposal was tied to the 40th percentile, which the department said at the time echoed the level when the overtime standard was first enacted under President Franklin Roosevelt.
It would also undo a change made in the 2019 rule that set a separate salary level for the U.S. territories of the Virgin Islands, Guam and the Commonwealth of the Northern Mariana Islands.
Biden’s proposal was met with support from labor unions and worker advocacy groups, though it falls considerably shy of the expansion sought by some liberals.
The Congressional Progressive Caucus last year urged the Labor Department to set the salary threshold at $82,732 by 2026 — equivalent to the 55th percentile of earnings for full-time salaried workers.
The proposed rule will be subject to a 60-day public comment period once it is published in the Federal Register.
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