COLUMBUS, Ohio — A new rule for the Department of Labor would raise the salary threshold to be exempt from overtime, meaning millions of Americans could take home more money. 

What You Need To Know

  • The salary threshold to be exempt from overtime would be raised to $44,000

  • This new rule is set to impact about 4 million Americans

  • If the rule doesn't face any backlash then it will go into effect July 1

The current salary threshold for “white collar exemptions” is an annual salary of $35,000. However, the Department of Labor announced a new rule that would raise that threshold. Full-time, salaried workers would have to make at least $44,000 a year in order to be exempt from overtime. That number would rise to almost $59,000 come Jan. 1, 2025. 

This rule is not new. Americans saw something similar under the Obama administration, but it ended up getting tied up in court and eventually rolled back. 

The goal of the legislation is to help relieve those struggling with the inflated economy. However, some believe it could have a negative impact on the economy and small businesses. Many small businesses, specifically restaurants and bars, rely on their employees to work extended hours and shift in order to help keep things afloat. Overworked employees have been the sentiment since the pandemic and the hospitality industry has been struggling to address the ongoing issue.

Eric Chaffee is a business law professor from Case Western Reserve University and said while the rule is meant to help Americans, it could backfire on our economy. 

“We’re in a period where we may be at the start of an economic slowdown,” said Chaffee. “You know, this is going to create some additional drag on the economy in the sense that businesses are going to have to pay workers more, which may be passed on to consumers. Consumers may be happy to pay that amount and are willing to pay that amount, but it also means that consumers may consume less which in fact may negatively affect the economy.”

This rule could also have more of an impact on places like Ohio where the cost of living is lower compared to the coastal states. About 40% of Ohioans make less than $50,000 and their ability to make more could help. 

“Workers are willing to work for less because their money goes further,” said Chaffee. “As a result of that, you may see that there are disparate economic impacts throughout the United States where, you know, people on the coasts, people in Chicago, this doesn't really affect that much but it has a real drag on the economy in certain regions of America.”

If the rule stays as is, then it will go into effect on July 1. However, professor Chaffee said we’ll likely see lawsuits against the legislation, much like we did in 2015 under former President Barrack Obama.