Overtime pay has long been a blessing and a curse: Some employers use it wisely and ethically, giving them an effective tool for managing labor resources, and many employees value the opportunity for extra earnings. But on the other end of the spectrum, some employers with questionable scruples use – or ignore – overtime rules in order to garner free or undercompensated labor. The Department of Labor is aiming to protect some salaried employees from this misuse.

The DOL announced a notice of proposed rule that would guarantee overtime pay for most salaried workers earning up to $55,000 per year, approximately 3.6 million people.

While overtime seems like a no-brainer for hourly workers, salaried employees often find themselves working well beyond a 40-hour week for no additional compensation while their hourly colleagues get time and a half. So while hourly workers get overtime by law, salaried employees do not enjoy these same protections, a practice the Biden administration believes is unfair and is working to remedy.

This plan has come after much deliberation. The announcement of the proposed rule follows months of extensive outreach to employers, workers, unions and other stakeholders, which included the department holding 27 listening sessions with more than 2,000 participants to inform the proposed rule.

“We are committed to ensuring that all workers are paid fairly for their hard work,” said Principal Deputy Wage and Hour Division Administrator Jessica Looman. “For too long, many low-paid salaried workers have been denied overtime pay, even though they often work long hours and perform much of the same work as their hourly counterparts.”

Goals of the proposed rule

The proposed rule will do the following, if adopted:

1. Restore and extend overtime protections to lower-paid salaried workers. This means if hourly workers are getting time and a half for working more than a 40-hour week, eligible salaried workers will also be paid for working beyond those same 40 hours. The DOL refers to many of the current pay rules as “outdated and out-of-sync,” and its proposed salary level would help ensure that more of these low-paid salaried workers receive overtime protections traditionally provided by the department’s rules.
2. Give workers covered by the rule valuable time back. While the proposed rule will identify executive, administrative or professional employees who would be overtime exempt, the rule would better ensure that those who are not exempt will gain more time with their families or receive additional compensation when working more than 40 hours a week.
3. Prevent future erosion of overtime protections and ensure greater predictability. The salary threshold for this rule would be updated every three years to reflect current earnings data.
4. Restore overtime protections for U.S. territories. With this rule, workers in any U.S. territory will have the same protections as those in the states.

The Department of Labor will issue a final rule after considering comments for 60 days.

An article by Allen Smith, published by shrm.org asks an interesting question: would employers consider raising employees’ salaries above the overtime threshold to avoid having to conform to the rule? In this instance someone employed at a lower salary could make more money than someone employed at a slightly higher salary. The article also suggests that if this is applied to a lower salary threshold vs. the one currently under consideration, there will likely be less court challenges if the rule is imposed. According to the article, the current threshold is $684 per week, or an annual salary of $35,568.