The Department of Labor on Tuesday announced a final rule that expands overtime protections to millions of salaried workers beginning this summer.
The overtime rule increases the salary thresholds necessary to exempt a salaried executive, administrative or professional employee from federal overtime pay requirements.
Effective July 1, the salary threshold will increase to the equivalent of an annual salary of $43,888 and will increase to $58,656 on Jan. 1. The July 1 increase updates the current annual salary threshold of $35,568, which is based on a 2019 overtime rule update.
In addition, the new rule will adjust the threshold for so-called highly compensated employees. Starting July 1, 2027, salary thresholds will update every three years by applying up-to-date wage data to determine new salary levels.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” Acting Secretary Julie Su said in a release. “Too often, lower-paid salaried workers are doing the same jobs as their hourly counterparts, but are spending more time away from their families for no additional pay. That is unacceptable.”
Wage and Hour Administrator Jessica Looman said the 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.”
The DOL previously said the rule change will affect 3.6 million salaried workers and so-called highly compensated employees eligible for overtime pay. The Labor Department had announced its proposal for a new threshold for overtime pay eligibility in August.
Senior living industry advocates told McKnight’s Senior Living at the time that the proposed changes were “ill-timed” and would worsen workforce issues for providers, threatening access for residents.
The Fair Labor Standards Act requires covered employers to pay their workers a minimum wage and, for employees who work more than 40 hours in a week, overtime pay of at least 1.5 times the employee’s regular rate of pay. Certain executive, administrative and professional employees are exempt, however.
According to DOL, the rule will:
- Restore and extend overtime protections to low-paid salaried workers who do not receive paid time-and-a-half for hours worked over 40 in a week.
- Better identify which employees are executive, administrative or professional employees who should be exempt from receiving overtime pay.
- Automatically update the salary threshold every three years to reflect current earnings data.
The rule is set to be published in the Federal Register on Friday, but a PDF is available now.
