There are an estimated 5 million Americans who are literally overworked and underpaid – they are working more than 40 hours a week but not getting the time-and-a-half overtime pay that they are due. For them, and for all workers, it is time for the Department of Labor to officially update the overtime threshold and stop businesses from depriving working Americans of the wages they have honestly earned.
President Obama announced a proposed rule late Monday to increase the overtime salary threshold from $23,660 ($455 a week) to $50,440 a year ($970 a week), starting in 2016.
This would update the extremely outdated Fair Labor Standards Act. That law dictates that employees who earn less than $23,660 get paid a time and a half if they work more than 40 hours per week. However, supporters of raising the overtime threshold argue that it is now way too low. In 1975, 62 percent of the workforce qualified for overtime based on the threshold. Today, the number stands at just 12 percent. Some argue that it’s as low as 8 percent.
The Obama administration’s proposed regulation would increase the threshold to include about “40 percent of workers,” according to Ross Eisenbrey, vice president of the Economic Policy Institute, during a press conference call on Tuesday.
“It’s correcting a lack of labor standards - restoring the kind of coverage that we had back in the 1970s, although not completely,” Eisenbrey said. “More than 60 percent of salary workers were protected for guaranteed overtime pay. This will not put that all the way back, instead 40 percent is a big improvement. Under the current rule only 8 percent are protected, and the goal of the administration is to set it at 40 percent and have the adjustment go forward.”
According to a press release from the Center for American Progress, the rule change would also “prevent a future erosion of overtime and ensure greater predictability by automatically updating the salary threshold based on inflation or wage growth over time.”
Raising the overtime threshold is extremely crucial to strengthening workers’ rights and the health of a middle-class economy. This would put an end to employers treating workers’ time as an inexhaustible resource and inaccurately labeling them as “executives” typically exempt from overtime protections, yet having them spend the bulk of their workday doing non-managerial work.
In 2004, President George W. Bush allowed for the classification of roughly 6 million workers as white-collar professionals exempt from overtime pay. That included such people as fast-food workers who might have some role in personnel decisions but no actual hiring and firing authority. According to Christine Owens, director of the National Employment Law Project during Tuesday’s call, under the outdated exemptions many workers were mislabeled as executives and “could be forced to work for free.”
“What we saw around the nation were workers with relatively low wages being classified as professionals… [performing] largely the same work they had done before they had gotten a somewhat fancier title… for which they got absolutely no compensation at all. And they were overtime exempt, not paid at all for overtime hours,” explained Owens.
Concerned citizens and groups are being urged to register their support for raising the salary threshold for overtime. You can send comments to the Department of Labor through FixOvertime.org.
The proposal does have its dissenters. Groups such as National Retail Federation and the National Association of Manufacturers argue that to shift costs of overtime pay, employers will dramatically cut salaries or hours. However, according to Eisenbrey, “In history, over the course of all of these other salary threshold increases, there’s not evidence that that has happened before. It's unlikely.”
According to Damon Silvers, director of policy and special counsel, at the AFL-CIO, raising the overtime threshold is “the most dramatic and wide-reaching effort/action that they have and can take under the executive powers to raise wages for America’s workers.”
When wages are secure, the middle class is secure. And when the middle class is secure, the American economy is secure. Raising the overtime threshold is a no-brainer.