On July 1, new public sector overtime rules created by the Biden administration took effect for both private and public sector employees, and the impact on state and local governments will be notable, according to a brief by The Public Sector HR Association (PSHRA).

According to the U.S.  Department of Labor, key provisions of the rules include the following: 

• “Expanding overtime protections to lower-paid salaried workers.”

  
  

• Ensuring that “those employees who are not exempt receive time-and-a-half pay when working more than 40 hours in a week or gain more time with their families.

• Establishing “regular updates to the salary thresholds every three years to reflect changes in earnings.”

The National League of Cities (NLC) counsels that communities must prepare their budgets for heightened payrolls as the new rules are phased in. In a brief article  by Stephanie Martinez-Ruckman NLC’s Legislative Director of Human Development advises that “Cities, towns and villages should begin to identify employees who will now fall within this updated rule’s impact.  Those employees who are not exempt (meaning their salaries fall below the new thresholds) will receive time-and-a-half pay when working more than 40 hours in a week.

“Even with a phased-in approach, the new rule has an implementation timeline that will put a strain on local government budgets that have not accounted for this increase in their annual budgeting process.” 

Martinez-Ruckman predicts that “It is very likely that this overtime rule will be challenged in court.” But she writes, “While the outcome of such a challenge is uncertain, local governments should proceed with budgetary planning that assumes the final rule will be enforced.”

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