President Joe Biden’s administration unveiled a rule that would force 4 million salaried employees to get overtime pay.
The administration of U.S. President Joe Biden introduced a rule on Tuesday extending required overtime pay to an estimated 4 million salaried workers, going even further than an Obama-era rule that was overturned in court.
According to U.S. Department of Labor regulation, firms that hire workers who put in more than 40 hours a week and make less than $1,128 per week, or roughly $58,600 annually, must pay overtime charges to those employees.
The Trump administration established the current wage ceiling, which is approximately $35,500 annually, in a 2020 rule that many Democrats and labor organizations have criticized for not going far enough.
The necessity for overtime does not change for hourly workers as a result of this rule.
In a statement, Julie Su, the interim secretary of labor and Biden’s choice to take over the position permanently, stated that the rule makes sure that employees either get paid more for working fewer hours or receive the same compensation for doing so.
According to American wage legislation, companies must pay qualified employees 1.5 times their ordinary rate of pay for any labor over 40 hours per week. If they do not primarily carry out management-related tasks, salaried employees who make more than the wage threshold may nevertheless be eligible for overtime compensation.
If a worker makes more than $107,432, they are typically automatically excluded. That cutoff will increase to around $151,000 under the new rule.
Salary thresholds for calculating overtime eligibility are greater in certain states than the present federal requirement, such as California and New York.
In 2016, the Labor Department raised the pay cap to around $47,000. The following year, a federal judge in Texas declared that the ceiling was unconstitutional because it was set so high, potentially affecting management employees who are not entitled to overtime pay protections.
Similar to the Obama administration rule, the new rule is expected to be challenged in court on the grounds that it violates federal wage law by granting overtime to numerous experts and supervisors who are paid less than the minimum wage.
Numerous significant business associations had urged the administration to postpone making any modifications to the overtime pay laws, pointing out that the lack of workers and uncertain economy had increased operational costs for businesses.
Michael Layman, senior vice president of the International Franchise Association, said in a statement that “many entrepreneurs continue to struggle in today’s unpredictable regulatory climate, grappling with lingering inflation, labor challenges, and high costs of goods.”
Additionally, according to Rep. Virginia Foxx, a Republican from North Carolina and the chair of a labor committee in the U.S. House of Representatives, the regulation could hurt workers by forcing numerous businesses to convert salaried employment into hourly positions, cutting employee pay, and eliminating some benefits.
“If the administration’s goal with this rule is to improve the standard of living for workers, then it’s failing miserably,” Foxx stated in a statement.
Concurrently, the regulation has garnered support from numerous Democrats, unions, and worker interest groups.
The largest labor union in the nation, the AFL-CIO, applauded the Biden administration’s action in restoring overtime rules, saying the Trump administration had “gutted” them. (Editing by Aurora Ellis; reporting by Daniel Wiessner in Albany, New York)
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