New Labor Law Would Make 3M Americans Eligible For Raises

The Biden administration is working to see if a new law could end up giving more than 3 million people in the U.S. raises.

A new proposal the Department of Labor put forth on Wednesday would make all those people eligible to receive overtime pay. It comes nearly 10 years after the Obama administration tried to pursue a similar effort by re-writing the eligibility rules for overtime that are included as part of the Fair Labor Standards Act.

Under the new proposal, any worker who earns less than $55,000 per year would automatically be entitled to overtime pay equal to one-and-a-half times their pay. That threshold would be an increase from the $35,568 that former President Donald Trump set back in 2019.

The initial proposal under former President Barack Obama would have set the overtime floor to $50,440 before they officially settled on a mark of $47,476. Ultimately, though, a Texas federal judge blocked that rule from ever going into effect.

According to DOL estimates, the change would end up providing higher wages to 3.6 million people in the U.S.
In a news release, Julie Su, the acting Labor Secretary, said:

“For over 80 years, a cornerstone of workers’ rights in this country is the right to a 40-hour workweek, the promise that you get to go home after 40 hours or you get higher pay for each extra hour that you spend laboring away from your loved ones. Workers deserve to continue to share in the economic prosperity of Bidenomics.”

The FLSA requires that all employers show workers are salaried, earn at least a certain salary and work in a “bona fide executive, administrative or professional capacity” if they want to make them exempt from federal requirements for hourly overtime pay.

If this week’s proposal ends up getting passed, it’s very likely that it’ll face the same legal arguments that were presented when Obama proposed his changes to the overtime rule.

Back then, Judge Amos Mazzant ultimately ruled that the DOL was exceeding the authority it had when raising the threshold for salary at such a drastic rate that it “effectively eliminates” the third part of the “test.”

Not surprisingly, many employer groups have already come out in opposition of the new rule, as their members would very likely see an increase in their labor costs as a result.

In a statement, the Partnership to Protect Workplace Opportunity said:

“Massive increases in labor costs like this simply cannot be absorbed by businesses. It will reduce opportunities, especially for recent graduates and younger professionals hoping to begin their careers.”

In addition to raising the salary threshold immediately, the Biden DOL proposal would also link future increases in that threshold to the 35th percentile of income. Every three years, then, the salary threshold would be subject to yet another increase.

Worker advocacy groups and labor unions obviously supported the proposal, even as it doesn’t go nearly as far as those groups would have liked the president to go.