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A new final overtime rule from the U.S. Department of Labor will reduce flexibility for employees and could force manufacturers to make difficult choices about their workforces, the National Association of Manufacturers said this week. 

The new rule, finalized April 23, increases the salary threshold used to determine whether a worker is exempt from overtime pay. Beginning July 1, 2024, certain salaried workers earning less than $43,888 per year will become eligible for overtime pay. This initial threshold will increase to $58,656 on Jan. 1, 2025. 

Currently, the overtime salary threshold is $35,568. Employees must be paid more than that salary threshold to be exempt from earning overtime. 

The change will present significant challenges to employers and employees alike, NAM Managing Vice President of Policy Chris Netram said. 

“Quarter after quarter, manufacturers cite workforce issues, such as attracting and retaining skilled employees, as their biggest business challenge,” Netram said. The “rule places new constraints on employers, reduces flexibility for the workers who will be reclassified and may force companies to make painful choices that limit both job creation and growth opportunities available to employees.” 

The overtime rule change is expected to affect nearly 4 million workers nationwide. Future updates to the salary and compensation levels will be made by the DOL every three years, beginning on July 1, 2027.