Labor Department Issues Overtime Rule

The Department of Labor announced a new rule on Tuesday that will extend overtime pay for about 1.3 million workers, the first such change in more than 15 years.

Set to go into effect on Jan. 1, the rule adjusts a key annual salary threshold below which workers can receive time-and-a-half pay after working more than 40 hours in a week. The threshold increases the cap to $35,000 from $23,660—the first change since the thresholds were set in 2004. The Obama administration attempted to raise the threshold in 2016 to $47,500, but the increase never took effect.

“This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers,” Acting U.S. Secretary of Labor Patrick Pizzella said in a statement on Sept. 24.

The Labor Department estimated 1.2 million workers will be entitled to minimum wage and overtime pay as a result of the increase to the salary level, while an additional 100,000 “highly compensated employees”—a different classification that includes managers and supervisors—would benefit from a change to their overtime salary threshold, which was raised from $100,000 to $107,432 per year.

The rule proposed by the Obama administration would have extended overtime eligibility to more than 4 million workers, according to the Wall Street Journal, but it was invalidated by a U.S. district court in November 2016.