(NewsSpace.com) – The Fair Labor Standards Act of 1938 is a federal law that offers specific protections to workers, namely a minimum wage, overtime pay mandate, and youth employment standards. The law mandates that anyone who works over 40 hours per week is subject to overtime pay at a rate of 1.5 times their normal wages. However, there was a large population left out of that: salaried workers above a certain threshold. Now, the Biden Administration has updated the overtime rule.
On Tuesday, April 23, the Biden Administration announced two new rules aimed at benefiting workers and the US economy. The first addresses one of the most significant issues that salaried workers face: a lack of overtime pay. These employees typically miss out on a lot of time with their families without adequate compensation. To that end, a new rule updates the salary threshold.
Currently, anyone who makes more than $35,568 is ineligible for overtime pay. As of July 1, that is set to increase to $43,888. Then, on January 1, 2025, it increases even further to $58,656. Additionally, at the start of next year, there will be an update to the methodology that determines the threshold.
According to the Department of Labor, “salary thresholds will update every three years” beginning on July 1, 2027. The first increase will benefit more than 1 million workers across the US. The second increase at the start of next year will benefit an additional 3 million workers. In a statement, Acting Secretary Julie Su said, “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay,” something she says is “unacceptable.”
The second rule passed will affect how financial advisers give advice to those saving up for retirement. It mandates they provide “prudent, loyal, and honest advice” free of personal interest. It’s expected to save the average middle-class person tens or even hundreds of thousands of dollars.
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