September 7, 2023
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Department of Labor Proposes Changes to Automatic Overtime Eligibility

At the federal level, overtime for salaried employees has been limited to those making up to $35,500 per year. But in August, the Department of Labor under acting Secretary Julie Su has proposed a change to that cutoff, calling for an increase to salaries up to $55,000 per year. The potential rule change could affect over 3.5 million working Americans. 

Automatic eligibility for time-and-a-half has been a focus of US administrations for nearly a decade. The Obama administration proposed a sizable increase only for a federal judge to strike down the change, stating that the DoL did not have the authority to make such a substantial increase in the cutoff, which had been at $23,500. During the Trump administration, the DoL was able to increase the amount to its current $35,500 limit.

One compelling reason for the DoL to pursue this is that many employers avoid overtime obligations by misclassifying workers as managers or illegally prevent employees from accessing automatic overtime by setting worker salaries just north of the current limit. 

The Department of Labor estimates that the rule change will see a transfer of more than $1 billion from employers to workers in its first year. Several large industries, including hospitality and retail have begun fighting back against the proposal, threatening to hire or reclassify existing workers as part-timers to avoid paying overtime.

While this will not affect New York State labor law, where the automatic eligibility is already roughly in line with the DoL’s proposed changes, it is interesting to see another instance of the Biden administration's quest to bend labor law back toward the benefit of workers.

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