Employers Must Decide Which Workers Qualify For Overtime

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Despite much pushback, millions of American white-collar workers are eligible for overtime pay this month under a new federal law that boosts the wage levels employers must use to decide which employees qualify for overtime and which are exempt.

In Minnesota, an estimated 10,000 workers are expected to benefit. The rule changes mainly apply to executive, administrative and other professional employees. It is not expected to affect construction and factory workers, who operate under a different set of wage rules and customs.

The law updates the U.S. Department of Labor's Fair Labor Standards Act in two stages — one effective July 1 and the second effective Jan. 1, 2025.

Before the change, any white-collar worker making more than $684 a week — or $35,568 a year — was exempt from overtime pay. As of July 1, that threshold jumped to $844 a week — or $43,888 a year. On Jan. 1, it jumps again to $58,653 a year or $1,128 a week.

"This will immediately improve the lives of the over 4 million lower-wage workers who will benefit by no longer working overtime for free," said Brian Walsh, who heads the Workers' Protection Unit in the Hennepin County Attorney's Office.

After two decades with little change to overtime rules, the law is finally "being modernized so that more salaried workers who are the lowest paid now get overtime pay. [Those impacted are] equivalent to the bottom 35% of all salaried workers in the lowest wage census region," Walsh said.

Some employers are expected to simply boost the salaries of their lowest paid workers to $58,653 in an effort to avoid having to pay more overtime.