Millions of workers earning less than $55,000 could get overtime pay under Biden proposal

About 3.6 million additional workers would be entitled to overtime pay under a new proposal from the Biden administration. The proposed rule would lift the cutoff for the extra earnings from its current level of $35,568 to $55,000 annually. 

The new overtime proposal from the Department of Labor is aimed at rectifying what it calls an "outdated" system where low-paid salaried employees aren't getting time-and-a-half pay if they work more than 40 hours a week. The rule would also require that the salary threshold for earning overtime would be updated every three years to reflect current income data. 

The proposal comes four years after the overtime rule was last updated, when the salary threshold was raised to $35,568 a year, a 50% increase from the previous threshold of $23,660 annually. At the same time, research has indicated that employers are increasingly turning to strategies to tamp down overtime pay, such as companies that inflate workers' titles to avoid paying them in full for overtime work. 

"For too long, many low-paid salaried workers have been denied overtime pay, even though they often work long hours and perform much of the same work as their hourly counterparts," said Jessica Looman, principal deputy wage and hour division administrator at the Labor Department, in the statement.

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Businesses are required to pay workers one-and-a-half times their hourly wage if they work more than 40 hours a week, although there's an exception for salaried managers, as long as they earn above the salary threshold. Under the new proposal, a salaried worker earning less than $1,059 per week, about $55,000 per year, would receive time-and-a-half.

The new rule, which is subject to a public commentary period and wouldn't take effect for months, would have the biggest impact on retail, food, hospitality, manufacturing and other industries where many managerial employees meet the new threshold.

With reporting by the Associated Press.