Who is eligible for the overtime pay increase?

The US Department of Labor announced a new final rule that will update the salary threshold under which workers must be paid overtime when they work more than 40 per week. It’s estimated that the two-step adjustment will benefit 4.3 million employees across the nation.

“Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable,” said Acting Secretary Julie Su in a statement. “The Biden-Harris administration is following through on our promise to raise the bar for workers who help lay the foundation for our economic prosperity.”

Who is eligible for the overtime pay increase?

Currently, salaried workers earning less than $684 per week, $35,568 per year are eligible for overtime pay. This level was set in 2019, but since then the US has experienced bout of higher-than-normal inflation which has eroded overtime protections leaving about one million lacking them.

Under the new final rule, the first threshold increase will be implemented 1 July 2024, and salaried workers earning under $844 per week, equivalent to $43,888 a year, will become eligible for overtime protections. The second increase will take place on 1 January 2025 with the threshold jumping to $1,128 a week, or $58,656 per year, nearly doubling the 2019 level.

Thereafter, the salary threshold will be automatically updated every three years based on the current wage data.

“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,” said Wage and Hour Administrator Jessica Looman. The new final rule will ensure that “lower-paid salaried workers receive their hard-earned pay or get much-deserved time back with their families.”

Of the 4.3 million workers the new rule will benefit, 2.4 million are women and nearly a quarter are workers of color according to the Economic Policy Institute. The largest number of workers that will be impacted are found in financial activities, health care and social services and professional and business services.