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Biden Administration Working Overtime To Regulate Working Overtime


By Sean Higgins, Competitive Enterprise Institute

The Biden administration issued a new rule this week that vastly expands of the number of workers covered by federal overtime rules. While some workers will earn more, others will find their ability to have flexible work arrangements with their bosses lost

“Today, the Biden-Harris administration is proposing a rule that would help restore workers’ economic security by giving millions more salaried workers the right to overtime protections if they earn less than $55,000 a year,” said acting Labor Secretary Julie Su. “Workers deserve to continue to share in the economic prosperity of Bidenomics.”

Federal law says employees must be paid time and a half once they work more than 40 hours in a week. However, businesses may exempt workers from the requirement if their duties are “managerial” in nature and they reach a certain salary threshold. Currently, workers had to earn at least $35,500 annually before they were covered. The new rule, which goes into effect at the end of the year, raises that by almost $20,000. The administration estimates this would extend the rule to 3.6 million additional workers.

The problem with the change is that it limits employers’ ability to work out alternate arrangements with employees where they work more than 40 hours in exchange for some other consideration, such as additional time off on other weeks. Under the new rule, employers are more likely to simply cut hours than to have to pay overtime at all.

This is the latest of several rulemakings on the issue. During the Obama administration, the Labor Department moved to set the threshold to $47,000. The rulemaking was challenged by business groups and a Texas court nullified the Obama rule, saying the administration “exceeded its authority.”

The Trump administration did its own rulemaking and set the threshold at $35,500. Then-Labor Secretary Alexander Acosta said he thought raising it to $47,000 caused a “stress on the system.”

Business groups accepted the Trump era rule but said the Biden rule went too far. “The DOL’s proposed rule would inject new regulatory burdens and compliance costs to an industry already reeling from workforce shortages and an onslaught of other unbalanced regulations,” said Chris Netram, managing vice president of the National Association of Manufacturers.

Some business groups indicated that the new rule would be challenged. David French, senior vice president of government relations of the National Retail Federation, told ABC News that the new rule exceeds the authority of the Labor Department.


Sean Higgins is a research fellow at the Competitive Enterprise Institute specializing in labor and employment issues.