On April 23, the Department of Labor (DOL) unveiled a final overtime pay rule that will qualify salaried workers classified as executive, administrative or professional (EAP) earning less than $43,888 a year for 1.5 times pay if they work more than 40 hours a week. The current threshold is $35,568 a year. This bump-up will be implemented in two phases. The first increase will kick-in on July 1 of this year. The threshold will expand again to salaried workers making less than $58,656 on Jan. 1, 2025.

The rule’s objective is to increase wages for workers in low-wage but salaried occupations across the economy by making them eligible for time-and-a-half pay. Most hourly workers are already entitled to overtime pay, but non-hourly EAP workers are exempt unless they earn less than the threshold set by the Labor Department.

An Economic Policy Institute analysis of the rule found that 4.3 million more workers will be eligible for overtime pay because of this action. Going forward, salary thresholds for overtime eligibility will be updated every three years.

The final rule will certainly face a legal challenge as did a similar rule issued by the Obama Administration. That rule was struck down by a federal judge in a challenge led by the U.S. Chamber of Commerce. The current threshold of a little over $35,000 was put in place by a rule adopted during the Trump Administration. As we have noted in previous policy updates, the Biden Administration is in overdrive mode pushing out these regulations in an effort to protect the President’s policies from Congressional Review Act (CRA) repeal should there be a different Administration next year. CRA reaches back to any regulation finalized within 60 Congressional days in the previous calendar year. The current estimate is that any CRA action would apply to any Biden Administration regulations finalized sometime in late May.  In addition to litigation, we expect to see legislation introduced to overturn the rule and will keep you apprised of activity on that front.