The Biden administration has introduced a new proposal with the goal of expanding eligibility for overtime pay to an extra 3.6 million American workers.
The proposed rule announced by the U.S. Department of Labor on Wednesday suggests that white-collar workers making less than $1,059 a week, or about $55,000 a year, would be entitled to overtime compensation.
This threshold represents an increase from the current limit of $684 per week, which ends up being $35,568 a year, set during the Donald Trump presidency in 2019.
According to the Department of Labor, the new rule could cost employers around $1.2 billion in the first year if enacted, with annual costs of $664 million over 10 years.
This would also lead to income transfers from employers to employees, amounting to $1.2 billion in the first year and $1.3 billion annually.
The proposed rule also introduces a novel aspect of updating the salary threshold every three years, and it is similar to a policy from the Obama era in 2016.
Back then, there was a push to raise the annual overtime threshold to approximately $47,500, but that was ultimately derailed by legal challenges.
It is important to note that this proposal is now open to public commentary and, assuming it passes, it would still take several months to be enacted.
If it does pass, the rule would particularly impact industries such as retail, food service, hospitality, manufacturing, and others in which a considerable number of managerial staff would become eligible for overtime pay due to the revised threshold.
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