Proposed Labor Department Rule Would Extend Overtime Pay To Millions Of Workers

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by Tyler Durden
Wednesday, Aug 30, 2023 - 07:45 PM

A new rule proposed by the Department of Labor would mean that millions of workers would be eligible for overtime pay if they work more than 40 hours per week.

In a Wednesday statement, the labor department proposed bumping the annual salary threshold from the current $35,568 per year set by the Trump administration to around $55,000 under the Fair Labor Standards Act, the Wall Street Journal reports.

Those who are salaried, make over $55k (est.), or work in a "bona fide executive, administrative, or professional capacity" aren't eligible for the time-and-a-half rate for working more than 40 hours per week, Bloomberg reports.

The change will benefit an additional 3.6 million or so workers according to the DOL. The department also proposes to auto-adjust this threshold every three years based on current earnings data.

That said, the proposal could have a domino effect on hiring and operational decisions within companies. Smaller businesses operating with slim margins might have to cut back on hiring, reduce hours, or even consider layoffs to offset the increased labor costs. Companies might also resort to legal loopholes or reclassify roles to skirt around these labor mandates, creating a whole new layer of bureaucratic mess.

Business groups that would be directly impacted by increased payroll costs under the rule change are expected to challenge the final version of the measure - particularly because of precedent set by previous litigation involving past overtime regulations.

An effort by the Obama administration to raise the salary threshold of the overtime test to $47,476, which would have offered new overtime protections to millions, was blocked in federal court in 2017. The Texas-based US district court found that the Obama-era salary threshold was set so high it made the job duties piece of the exemption test irrelevant, and expanded protections to workers Congress sought to exclude.

That ruling could be used as ammunition against the latest proposal from the Biden administration, if a court could similarly be convinced that the new threshold crowds out other parts of the test. The DOL’s latest proposal doesn’t include any major changes to the job duties provisions. -Bloomberg

While Democrats will be sure to cheer their new 2024 election talking point, the $55,000 salary cap falls far short of the $82,732 threshold some had suggested. 

Once the proposal is officially entered into the Federal Register, the public will have 60 days to submit input on potential changes, according to the report.

And one final thing, with all of the Biden administration's crowing about bring down inflation (reminder, just slowing rate of ascent in prices, not actually lowering prices), how does the president think praising unions' 40%-plus wage-hikes and encouraging a new wave of OT pay-hikes will affect 'inflation'? Presumably, that money-supply sending gas prices and home prices higher will be Putin's fault too (or Trump's)?