After Months of Study, Department of Labor Announces Sweeping New Overtime Rule

Around four million workers will qualify for overtime pay beginning in January once a new rule just released by the Department of Labor is enacted.

The Labor Department’s rule increases the salary threshold for overtime pay from just under the current nearly $44,000 to around $58,600. The Department has further announced that such salary thresholds will be routinely updated every three years, beginning on July 1, 2027.

The new rule, said Julie Su, acting director of the Labor Department, “will restore the promise to people that if you work more than 40 hours a week, you should be paid for that time.”

“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,” Su continued in a statement, adding: “That is unacceptable.”

The overtime ruling has been a long time coming. In 2016, then-President Obama asked the Labor Department to increase the salary threshold to $47,476 a year. That action was subsequently subject to litigation on behalf of nearly half of the states and a host of business groups, leading to a preliminary injunction issued by a federal judge in Texas.

In the summer of 2017 the Trump Administration announced that it would not go to bat for the new threshold.

The overtime issue has been particularly criticized by smaller businesses which have contended that an increased threshold would prove economically burdensome. “This will not just increase costs for small businesses, but ultimately the consumers as well,” remarked Anne Reinke, chief executive officer of the Transportation Intermediaries Association.

In the wake of the new DOL rule, Chris Netram, vice president of policy for the National Association of Manufacturers, said the action places new constraints on employers, and “reduces flexibility for the workers who will be reclassified.”

Netram additionally remarked that the DOL action may “force companies to make painful choices that will limit both job creation and growth opportunities available to employees.”

Liz Shuler, president of the AFL-CIO characterized the new rule as one that is important for working families. The AFL-CIO leader earlier remarked that “employers who do not wish to pay additional overtime will now no longer be able to rely on unpaid overtime, and instead will have to reassess the way they distribute workloads to their employees.”

​By Garry Boulard

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