In a rare display of bipartisanship, Congress has passed landmark legislation designed to reshape the American workweek. The new law eliminates federal income taxes on the first 10 hours of work each week and removes the mandate for overtime pay beyond 40 hours a week. The bill received support from both Republican and Democratic lawmakers who argue that it strikes a balance between putting more money in workers’ pockets and offering flexibility for businesses to grow and adapt to modern work patterns. (TL35-2024)
Under the new legislation, hourly employees will not pay federal income tax on the first 10 hours they work each week while salaried employees will see an equivalent 25% reduction in their income tax. Lawmakers from both parties argue that this change will allow workers to see an immediate benefit in their earnings, especially those at the lower end of the income spectrum.
The law also removes the longstanding requirement for time-and-a-half pay for hours worked beyond 40 each week, making overtime pay optional at the employer’s discretion. The provision, designed to help companies reduce labor costs, grants employers the flexibility to schedule longer hours without incurring additional payroll expenses. Instead of mandatory overtime pay, employers may offer incentives such as time-off accrual, bonuses, or flexible work arrangements.
Supporters say the dual policies will help American workers keep more of their paychecks while creating new opportunities for flexible, modern work schedules. They believe that by giving workers more immediate access to untaxed earnings, the bill will encourage workforce participation, especially among those balancing multiple jobs or part-time work. The policy is also expected to benefit gig economy workers, who often face unpredictable schedules and variable incomes.
“This type of workplace reform will make a difference in the lives of millions of Americans,” said Senator Jane Miller (R-NY). “The benefits will be immediate for workers with more money to spend on food, gas and other household items.”
“This law empowers businesses to offer more hours without incurring overtime costs which ultimately translates to job growth and a stronger economy,” explained Representative Tom Greyson (D-OH), one of 35 legislators who co-sponsored the bill.
Critics, however, argue that the changes may ultimately reduce overall earnings for some workers and undermine traditional worker protections.
“We’ve fought for fair wages and protections for years, and this move is a step backwards,” said Jessica Martin, President of the American Workers Union. “We’re putting workers at risk of burnout and exploitation by removing this critical protection.”
“The 21st century workplace is moving away from overtime pay,” countered Miller who cited the use of AI by employers to optimize workforce schedules by distributing hours evenly among employees, relying on part-time workers or independent contractors who are already exempt from overtime pay, and hiring temporary staff to cover seasonal or high-demand periods.
“Unfortunately, this will be very disruptive for the healthcare industry,” pointed out Martina Aquino, HR director at Portland Medical Center. “Not being able to offer overtime pay will make it incredibly difficult to attract healthcare professionals.”
“There will be unintended consequences to such a dramatic change in the way we handle overtime pay,” said Representative Alex Torres (I-OR) — one of the few legislators to vote against the bill.
The new legislation is scheduled to take effect January 2026 and includes provisions for periodic review and adjustment. Lawmakers have committed to monitoring the effects of the law closely and adjusting the policies as needed to ensure fair treatment of workers while supporting business growth.
The Department of Labor will oversee compliance and work with employers to provide guidance on the non-monetary incentives that can be offered in place of overtime pay. Federal agencies will coordinate with state labor departments to address specific industry needs and worker concerns as the law is implemented.
Whether this bold bipartisan experiment succeeds in fostering economic flexibility and fair wages remains to be seen. In the meantime, Congress has set a precedent that may reshape how Americans balance work, income, and quality of life for years to come.
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