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Posted: 2024-04-23T22:44:45Z | Updated: 2024-04-23T22:44:45Z

A new federal rule to expand overtime protections to millions of workers now excluded under current law has been finalized, the Biden administration said Tuesday.

The Labor Departments regulation would ensure that salaried workers who earn less than $58,656 per year would automatically be entitled to overtime pay when they work more than 40 hours in a week, starting in 2025. Whats known as the overtime salary threshold would then be updated every three years, starting in 2027, to account for inflation.

The agency estimated that the change would extend the overtime laws coverage to an additional four million workers, meaning they couldnt be forced to work extra hours without their employers paying a premium.

Julie Su, the Labor Departments acting secretary, said updating the regulation was about basic fairness.

This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time, Su said in a statement. Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable.

Most hourly workers are entitled to time-and-a-half pay when they log over 40 hours, which discourages employers from working them too much. But whether salaried workers can get overtime pay depends on how much they earn and what their job duties are. Employers have an incentive to pile work onto those without overtime protections, since the extra work is done essentially for free.

This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time.

- Julie Su, acting labor secretary

The current overtime salary threshold is just $35,568, set by the administration of former President Donald Trump. Salaried workers, such as retail store managers , must earn less than that amount to automatically be entitled to any additional pay when they work more than 40 hours.

Progressives have fought for years to increase the salary threshold in order to restore the share of the U.S. workforce that gets paid overtime. An effort by former President Barack Obama was blocked in federal court in 2017. His successor, Trump, released a watered-down version of the reform that covered fewer workers than Obamas version would have.

Last year the Biden administration said it planned to raise the threshold to a little over $55,000 . It ultimately hiked that figure to $58,656 to account for newer wage data.

Business groups arent excited about higher labor costs and could end up challenging the regulation in federal court, just as under Obama.