Today, National Economic Advisor Lael Brainard, Domestic Policy Council Director Neera Tanden, and Acting Secretary of Labor Julie Su led a White House event announcing two new rules to support workers and grow the American economy from the bottom up and the middle out.
Senior administration officials were joined by workers, union leaders, and advocates to discuss new Department of Labor (DOL) actions to update the outdated overtime threshold and protect Americans from hidden fees that eat into their retirement savings. First, DOL's overtime rule will extend overtime protections to millions of workers, fulfilling the promise that a hard day's work leads to a fair day's pay. The rule will also ensure that the threshold for determining overtime eligibility rises with wage growth in the future. Additionally, DOL's new retirement rule will save Americans billions of dollars as they prepare for retirement by ensuring that savers receive retirement advice in their best interest, rather than in the interest of retirement professionals. By preventing hard-earned savings from being lost in hidden fees from bad advice, Americans can save up to 20% more in retirement savings.
Specifically, the new rules will:
- Extend Overtime Pay Eligibility: For more than 80 years, salaried workers earning less than a certain threshold have been entitled to time-and-a-half pay when they work more than 40 hours per week. However, the threshold that helps determine eligibility for overtime pay has risen far slower than wage growth, excluding many lower-paid salaried workers from overtime protections. DOL's rule will raise the minimum salary threshold for the overtime exemption for executive, administrative, and professional employees in two stages, and provide for increases every 3 years to ensure the threshold keeps up with wage growth. This change will extend overtime protections to nearly 1 million workers based on an initial salary increase to $43,888 ($844 per week) on July 1, up from $35,568 ($684 per week). And it will extend protections to about 3 million more workers on January 1, 2025 based on a second increase to $58,656 per year ($1,128 per week).
- Enhance Retirement Security: DOL's rule will protect the millions of Americans who are diligently saving for retirement when they rely on advice from trusted professionals on how to invest their savings. For example, hidden fees from bad advice on just a single product-fixed index annuities-is currently costing savers as much as $5 billion per year. The rule will require trusted investment advice providers to give prudent, loyal, and honest advice, and prevent them from providing recommendations that favor the investment advice providers' interests-financial or otherwise-at retirement savers' expense. These new safeguards will save tens or even hundreds of thousands of dollars per impacted middle-class saver.
