In a transfer that might have an effect on tens of millions of employees, the Biden administration introduced Wednesday that it was proposing to considerably enhance the cutoff beneath which most salaried employees robotically obtain time-and-a-half extra time pay.
Below the proposed rule, issued by the Labor Division, the cutoff for receiving extra time pay after 40 hours every week would rise to about $55,000 a 12 months from about $35,500, a stage that was set through the Trump administration.
About 3.6 million salaried employees who fall between the present cutoff and the brand new one would successfully acquire extra time pay eligibility underneath the proposed rule, the division mentioned. Some employers could select to boost employees’ pay above $55,000 to keep away from paying extra time.
Julie Su, the division’s performing secretary, mentioned in an announcement that the rule “would assist restore employees’ financial safety by giving tens of millions extra salaried employees the appropriate to extra time protections.”
Some trade teams, notably in retail, eating and hospitality companies, have argued that expanded extra time eligibility could lead on many employers to transform some salaried employees to hourly employees and reduce their hourly wage to go away their total pay unchanged.
These teams argue that vastly increasing extra time eligibility may additionally discourage employers from selling employees to junior administration positions that present a path to well-paying careers, as a result of extra employers could be compelled to pay junior managers extra time after they work lengthy hours.
The proposal follows a equally bold transfer by the Obama administration in 2016, which sought to boost the extra time cutoff for many salaried workers to $47,500 from about $23,500. However simply earlier than Donald J. Trump took workplace as president, a federal choose in Texas suspended the Obama rule, concluding that the administration lacked the authorized authority to boost the extra time cutoff so considerably.
The Trump administration later put in the present extra time restrict of about $35,500.
Below the Biden administration’s proposal, the extra time restrict would robotically modify each three years to maintain tempo with rising earnings.