Millions of American workers will see higher overtime pay, following a new U.S. Labor Department rule finalized Tuesday.

The rule requires employers to pay salaried workers more when they log at least 40 hours per week or give them more time with their families.

What You Need To Know

  • The Labor Department finalized a rule Tuesday to increase overtime pay for salaried workers

  • The rule requires employers to pay salaried workers more when they log at least 40 hours per week or give them more time with their families

  • The rule takes effect July 1, increasing the salary threshold to $43,888

  • The salary threshold for qualifying employees will be updated every three years beginning in 2027

"We're putting more money in the pockets of millions of American workers,'" President Joe Biden said in a video message Teusday. "Because you earned it."

The new overtime rule comes the same day the Federal Trade Commission banned non-compete agreements that prevent workers from working for competitor companies. About 30 million American workers are subject to such agreements, according to the White House.

The overtime 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,” Acting Labor Secretary Julie Su said in a statement. “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.”

Under the final rule, salaried workers who make less than $58,656 annually and who work more than 40 hours per week will receive time-and-a-half pay or more time off. The rule takes effect July 1, increasing the salary threshold to $43,888 and increasing it again to $58,656 Jan. 1.

The current salary threshold of $35,568 annually was established in 2020. Beginning in 2027, the department will update salary thresholds every three years using up-to-date wage data.

The Labor Department estimates the rule will increase overtime pay for about 4 million workers.

Senate Majority Leader Chuck Schumer praised the rule on X Tuesday, saying the new Labor Department rule “is one of the most significant ways we can increase incomes for working people, putting more money in their pockets and giving them more time with their families.”