Stricter Overtime Rules Would Help Workers
Obama plan would benefit 198,000 Wisconsin workers, some below the poverty line.
Overtime provisions protect some workers who put in long hours, making sure that employees earn extra pay when they work overtime. But many low-paid salaried workers are not eligible to earn overtime pay, making it harder for those workers to climb the economic ladder. That could change under a new proposal that would raise the salary threshold under which workers are considered automatically eligible for overtime pay, a measure that would directly benefit nearly 200,000 workers in Wisconsin.
Current overtime pay rules protect most hourly workers, but leave out many low-paid salaried workers. The Economic Policy Institute explains :
“Salaried workers who earn below $455 per week, or $23,660 per year, are automatically eligible for overtime pay, regardless of the nature of their job or the duties they perform.
Salaried workers whose earnings are $455 per week or more can be exempted from the right to receive overtime if they fall into one of three categories: executives, administrators, and professionals. Each of these exempt categories is defined by a set of duties showing that the exempt employee is skilled and exercises independent judgment, or is a boss with a department and employees to supervise.”
The current, low salary threshold for determining eligibility for overtime pay means that salaried workers who earn as little as $24,000 a year – below the poverty line for a family of four – might not be eligible to receive extra pay for the extra hours they work. EPI explains how the current threshold harms workers with low salaries by exempting them from overtime rules:
“For example, an assistant manager at a fast-food restaurant with a salary of $24,000 and who spends 95% of his or her time cooking fries, running a cash register, and sweeping floors can be required to work 60 or 70 hours a week and yet be denied any overtime pay, simple because he’s classified as a manager. On the weeks he works more than 64 hours, his effective hourly wage is below the federal minimum wage of $7.25; workers who are exempt from overtime regulations are also exempt from minimum-wage regulations.”
A proposed rule drafted by the Department of Labor and endorsed by President Obama would fix the situation by raising the overtime threshold to $50,440 per year, insuring that millions of workers who earn low salaries will be eligible for overtime pay if they work extra hours. The salary threshold has been changed only twice in the last 40 years, and covers far fewer workers than it used to due to the effects of inflation: in 1975, the salary threshold covered 62% of salaried workers, compared to only 8% today. The pending rule change also includes small automatic increases in the salary threshold going forward so that the salary threshold keeps up with rising costs.
The new rule could add as much as $1.3 billion to workers’ pockets, according to administration officials.
Strengthening overtime rules would give a boost to Wisconsin workers with low salaries. Nearly 200,000 workers in Wisconsin would directly benefit from this move, or nearly 1 out of 4 salaried workers in the state.