This week, the Administration announced a final rule updating overtime rules for millions of lower-income salaried employees. The new rule raises salary thresholds required to exempt a salaried executive, administrative or professional employee from federal overtime pay requirements. Acting Secretary of Labor, Julie Su, shared that, “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.”
The new rule takes effect July 1, 2024, and will increase the overtime salary threshold from $35,568 to $43,888. The salary threshold will increase again to $58,568 on January 1, 2025. Additionally, the rule will adjust the threshold for highly compensated employees, and salary thresholds will be updated every three years by applying current wage data to determine new levels. The Department drafted this new rule after consulting and engaging with employers, workers, unions and other stakeholders and received approximately 33,000 comments in developing its final rule – although not all stakeholders supported the increases
This rule will take effect for some school district employees, including school nurses, athletic trainers and librarians. However, both secondary and postsecondary teachers and school administrators are exempt from the federal overtime rule.
The Department of Labor received a request from the National Education Association to end exemptions for teachers, given that they do not currently qualify for mandatory overtime pay under the Fair Labor Standards Act. The Department shared that they would require a separate rulemaking process to consider a change of that nature.
Proponents of the rule argue that employees should have the predictability of guaranteed overtime pay, and that it will benefit those who are currently overworked and underpaid. Ranking Member Bobby Scott (D-PA) on the House Committee for Education and the Workforce shared, “This rule is good for workers, good for businesses, and good for our economy.”
Opponents of the rule argue it will force secondary and postsecondary institutions to come up with millions of dollars in increased wages. This poses difficulties for postsecondary institutions struggling with constraints on tuition revenue and state funds, and for secondary school districts with limited budgets. Education leaders have been preparing for this shift for months, but may need to redirect efforts/resources toward recordkeeping and tracking hours for more employees. Ranking Member Bill Cassidy (R-LA) on the Senate Health, Education, Labor and Pensions Committee argued that, “The new overtime rule forces businesses to make a choice: eliminate jobs, gut wages, or raise prices on families already feeling the affordability crunch under President Biden.”
The new rules are likely to be challenged in court, so could be delayed during that process.
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