New Overtime Pay Eligibility Rule to Impact Over 4 Million U.S. Workers

The U.S. Department of Labor has finalized a rule that will significantly expand overtime pay eligibility for millions of salaried workers. 

The policy is an effort to ensure fair compensation for those who work more than 40 hours per week.   

According to a report published by CNN Politics, the new rule, set to take effect on July 1, will raise the salary threshold under which salaried employees qualify for overtime pay in two stages — initially increasing it to $43,888 per year ($844 per week) and then to $58,656 per year ($1,128 per week) on January 1, 2025.  

The administration estimates that approximately 4 million additional workers will become eligible for overtime pay once the rule is fully implemented in January 2025.  

However, it’s reported that the rule has faced criticism from business groups, who argue that it will increase operating costs and potentially force some companies to cut jobs or raise consumer prices.   

Notably, the National Restaurant Association and Associated Builders and Contractors have expressed concerns about the impact on their respective industries, with the latter considering legal challenges to the rule.  

According to CNN, this expansion of overtime pay eligibility follows a previous attempt by the Obama administration to raise the salary threshold, which was blocked by a federal judge in 2016 after being challenged by business groups and 21 states.  

The Trump administration later implemented a more modest increase to the current level of $35,568 per year ($684 per week) in 2019.  

As the new rule takes effect, it is expected to have significant implications for the future of work, potentially influencing labor market dynamics and business management strategies.