Last week, the Trump administration proposed new rules raising the salary ceiling for workers entitled to overtime pay.
Currently, workers are entitled to earn overtime if they earn less than $23,660 per year and work more than 40 hours a week. Under the new rules, workers who earn less than $35,308 annually would be eligible for overtime.
“Our economy has more job openings than job seekers and more Americans are joining the labor force,” said Labor Secretary Alexander Acosta in a statement. “…Today’s proposal would bring common sense, consistency and higher wages to working Americans.”
Who Gets a Raise?
The new rules would cover an additional 1.1 million workers. That’s considerably less than the Obama administration proposal, which would have expanded time-and-a-half eligibility to around 4 million. That proposal would have more than doubled the threshold for overtime, setting the new limit at $47,476 per year.
The Obama administration’s rule would have made it harder for employers to classify as exempt workers who had some supervisory duties but who made less than the salary threshold. This effect provided the legal challenge that led to the rule being struck down in court by a federal judge in Texas.
In his ruling, Judge Amos L. Mazzant said:
With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. The Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress and not the department, should make that change.
Will This Overtime Expansion Hold Up?
Like the Obama rule, this change is expected to face legal challenges.
“The salary threshold was last increased in 2004, during the George W. Bush administration,” write Jaclyn Diaz and Chris Opfer at Bloomberg Law. “The DOL is using the same economic methodology used to reach that standard, which the department officials say should protect the proposal from litigation.”
However, they note that business groups and worker advocates may still challenge the rules in court, for very different reasons. Business groups will likely seek to keep payroll costs low, while worker advocates may be concerned that the rule doesn’t go far enough, especially as it lacks any change to the “duties tests” the Department of Labor uses to determine overtime eligibility.
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