Millions of salaried American workers are slated to qualify for overtime pay thanks to a new Biden administration rule that employers warn will only harm the economy.
As it currently stands, only salaried workers who earn $684 a week, or $35,600 a year, qualify for overtime pay if they work over 40+ hours a week. With the new rule, the threshold would be raised to $1,059 per week, or $55,000 a year.
The rule is expected to affect an estimated 3.6 million workers, and the administration hopes to automatically raise the threshold every three years going forward.
“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,” acting Labor Secretary Julie Su said in a statement.
“I’ve heard from workers again and again about working long hours, for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifices. Today, the Biden-Harris administration is proposing a rule that would help restore workers’ economic security by giving millions more salaried workers the right to overtime protections if they earn less than $55,000 a year,” she added.
But while all this sounds nice at first glance, the problem is that it’s not economically smart, according to businesses and experts.
“It’s going to raise the cost of doing business,” Michael Layman, the senior vice president for government relations for the International Franchise Association, bluntly said to The Wall Street Journal.
Ben Brubeck, Associated Builders and Contractors (ABC) vice president of regulatory, labor and state affairs, agrees.
“ABC is disappointed that the DOL is moving forward with a proposed overtime rule since multiple industries, like construction, are still grappling with the lingering economic consequences of inflation, global supply chain disruptions, rising materials prices and workforce shortages, all of which push operational costs ever higher,” he said in his own statement.
“It is unfortunate that the DOL did not listen to our repeated requests to abandon or postpone issuance of the proposed overtime rule until the current economic situation stabilizes or improves, allowing employees and employers to fully navigate the paradigm shift of work in America without new unnecessary and costly red tape,” he added.
The National Retail Federation has also spoken out against the rule.
“The Administration’s proposed threshold is well above the rate of inflation. We’re not convinced that such an increase is warranted at this time. Secondly, we questioned the department’s authority to attempt to tie the hands of future administrations through automatic increases,” the organization said in a statement, according to Crain’s Cleveland Business.
This isn’t the first administration to attempt to enact this particular rule.
“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,” according to Crain’s.
“The Texas-based U.S. 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.”
Josh Ulman, a spokesperson for the Partnership to Protect Workplace Opportunity, added that the group is “disappointed” by the new rule.
“The DOL is proposing a nearly 55 percent increase to the minimum salary threshold. Massive increases in labor costs like this simply cannot be absorbed by businesses,” he said in a statement.
“Meanwhile, automatic increases are unlawful and will set up the economy for failure, as increases will occur regardless of economic circumstances, exacerbating any problems that may exist,” he added.
Sen. Mike Braun, a Republican, concurs:
“President Biden and his Acting Labor Secretary Julie Su (who they haven’t put up for a vote in the Senate, because she doesn’t have the votes to be confirmed) are putting out a job-killing overtime rule that’s even more extreme than the one struck down by the courts when Obama tried it,” the senator said on X/Twitter.
“At a time when businesses are cutting jobs just to avoid bankruptcy due to Bidenflation, now is the worst time to make drastic changes that will lead some businesses to fire workers,” he added.