New overtime rule to benefit millions of U.S. healthcare workers

WASHINGTON, UNITED STATES — The U.S. Department of Labor’s new overtime rule will significantly impact healthcare organizations, particularly those employing low-paid salaried workers. 

Higher salary threshold for overtime exemption

Effective July 1, salaried employees earning less than $43,888 annually will qualify for overtime pay if they work over 40 hours per week, up from the current $35,568 threshold. On January 1, 2025, this threshold will further increase to $58,656.

The rule is projected to result in an annual transfer of $1.5 billion from employers to workers in the form of increased pay across all industries. 

However, according to the Economic Policy Institute, the new mandate will affect only 3% of the workers covered by the Fair Labor Standards Act. 

Mixed reactions from healthcare orgs, supporters

The new overtime rule has garnered mixed reactions from different institutions. 

The new requirements are expected to significantly affect healthcare organizations, particularly those employing nurses, medical assistants, and administrative staff. These employers will face increased labor costs or the need to limit overtime hours.

“This 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 an April 23 news release. 

Beth Milito, executive director of the National Federation of Independent Business’ Small Business Legal Center, said it would cause an unwanted spike in salary expenses. 

“Small businesses will need to spend valuable time evaluating their workforce to properly adjust salaries or reclassify employees in accordance with this complicated mandate,” Milito said.

According to the National Employment Law Project, the rule will encourage institutions to reassess workloads to reduce salary costs, resulting in better working conditions.

“This shift will foster both a healthier work-life balance and an environment where employees are compensated with fair pay, which can also result in new hiring.”