New Fed bill to force overtime pay limits higher

Proposal could see millions of salaried employees be eligible for extra pay

New Fed bill to force overtime pay limits higher

Millions more salaried American workers could be entitled to overtime pay for working more than 40 hours per week under a bill reintroduced on Wednesday by Democratic lawmakers in both the House of Representatives and the Senate.

The Restoring Overtime Pay Act, which was reintroduced by Reps. Alma Adams (D-NC) and Mark Takano (D-CA) and Sen. Sherrod Brown (D-OH), would build on the provisions of a 2019 law with the same name.

Currently, fewer than 15% of all full-time salaried workers receive overtime pay, according to Senator Brown. The new bill would expand overtime pay eligibility to 55% of salaried workers earning up to $45,000 annually. This salary threshold would gradually increase each year for five years, culminating in a salary cap of approximately $82,700 by 2027.

“If you put in extra work, you should earn extra pay – it’s that simple,” said Sen. Brown. “Expanding overtime pay would mean more money in the pockets of working class and middle-class Ohioans who work 50, 60, or 70 hours a week. It’s long past time for overtime work to mean overtime pay again.”

A survey by spiceworks found that 71% of Americans work overtime at least once a week.

Currently, only salaried workers earning $35,568 or less per year are eligible for overtime pay.

According to Adams, exempt employees are too frequently denied fair pay and fair treatment. The proposed legislation is intended to address these issues and provide better protection for workers.

The overtime rule, which determines which employees are eligible for overtime pay, is set to be updated in May by the Department of Labor Wage and Hour Division. The last changes to the rule came into effect in January 2020, raising the weekly minimum salary for overtime exemptions from $455 to $684.

A Supreme Court ruling in February held that highly paid nonsalaried employees may be entitled to overtime pay under certain circumstances – in this case the pay package under discussion was $200,000.

The Restoring Overtime Pay Act would build on this precedent to ensure that more employees are entitled to extra compensation for overtime work.

The legislation faces an uncertain path through Congress, and employers are concerned that it may add substantial costs from salaried workers who are currently denied overtime pay.

Current overtime legislation is contained in the FLSA

  • The FLSA requires that most employees in the US must be paid the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.
  • There is an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees, and certain computer employees.
  • To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $684 per week.
  • Employers may use nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis, to satisfy up to 10 percent of the standard salary level.
  • Job titles do not determine exempt status.
  • To apply for an exemption, an employee’s specific job duties and salary must meet all the requirements of the Department’s regulations.

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