Stricter Overtime Rules Would Help Workers

Obama plan would benefit 198,000 Wisconsin workers, some below the poverty line.

By , Wisconsin Budget Project - Sep 7th, 2015 10:56 am
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President Obama at Master Lock

President Obama at Master Lock

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.

11 thoughts on “Stricter Overtime Rules Would Help Workers”

  1. AG says:

    I am not against this in concept… when I first heard of it I supported it. However, when I saw that the minimum level goes up over 50k I was very concerned! I know personally of a non-profit I worked at that absolutely can not afford to pay their very few employee’s overtime and the structure and needs of the organization doesn’t support this type of pay system. Unfortunately though, those employee’s will now fall under the minimum. The organization will probably have to let one person go… and I can only imagine how much it will affect larger organizations and companies.

    This is such a far reach… since when is someone making 50k low income? This is a typical bait and switch… talking about a fast food assistant manager during the argument and then putting up a 50k salary as the threshold. This is another example of why reasonable and moderate citizens can’t fully support either party… they always reach beyond “reasonable.”

  2. Tim says:

    If the businesses want to pay their employees less, they always can. They just can’t make them work more than 40 hours a week without pay, like they can with salaried employees.

    I don’t see what the problem is.

  3. AG says:

    If a business or organization decreases the employee’s pay then what have we really solved here?

  4. Tim says:

    The employer or business doesn’t have to decrease their pay; that’s their choice. It’s also the employee’s choice to find another job. Considering the recent Labor Day holiday, it’s better there will be less jobs out there that expect people to work for free after 40 hours/week & now there will be more employers paying people for the time they actually put in on the job.

    I don’t know how anyone can stand up for unpaid labor.

  5. Wisconsin Conservative Digest says:

    Obama/Biden/Hilary are the worst people in history for the workers. Higher food, energy, lower salaries, no overtime, less bennies, part time jobs, forcing people to get int o their savings. This only makes things worse. This plus the $15/hr, or Living wages is just coverup fro their failures to have a good recover from the recession caused by the Clinton policy on easy home loans from Fannie and Freddie.
    Inner city kids have no jobs, in NY 80% do not have any work, same in Chciago. Illegals taking all the jobs, let in by Obama. Barkley sez: Inner city has voted for dems the last 50 years, worse off now, only the white, male, liberals racist are doing better”. Time for change, that is why half of inner city likes Trump.

  6. AG says:

    No one is standing up for unpaid labor… but when it comes to setting a level that makes sense vs 50k+ where some people may end up getting let go… I’d side towards the reasonable level. Fact is, not just anyone can be considered exempt. The assistant manager in the article above is not considered exempt and thus is guaranteed overtime pay. There’s strict criteria for who can be considered exempt and there is usually a reason why.

    Point is, even considering bumping up the minimum as a good idea, which I think is reasonable… having such a dramatic change will like cause some considerable disruptions to many of those employers and I wouldn’t doubt it could cause people to lose their jobs.

    I don’t know how anyone can stand up for people losing their jobs.

  7. Rich says:

    AG, all the details you can stand:
    http://www.dol.gov/whd/overtime/NPRM2015/

    “set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually);”
    http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm

    Their justification:
    “The Department’s proposal to set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers represents the most appropriate line of demarcation between exempt and nonexempt employees. This salary level minimizes the risk that employees legally entitled to overtime will be subject to misclassification based solely on the salaries they receive, without excluding from exemption an unacceptably high number of employees who meet the duties test. As proposed, this would raise the salary threshold from $455 a week (the equivalent of $23,660 a year) to about $970 a week ($50,440 a year) in 2016.1”

    Read all the gory details here:
    http://www.regulations.gov/#!documentDetail;D=WHD-2015-0001-0001

    And all of the comments, including lots of robo-form ones that complain about this “massive and unjustified increase”:
    http://www.regulations.gov/#!docketBrowser;rpp=25;po=0;dct=PS;D=WHD-2015-0001

  8. AG says:

    Rich, thanks for the link with all the detail. However, that is still an arbitrary point.

    This may be a small thing affecting a small (relatively) number of people… but all these policies add up where it benefits a large number but eliminates a small number of jobs. We put all of them together and slowly we’re creating a large base of unemployable (because of cost) people and then a quick jump to “sustainable” wage jobs. Not that the high wages are bad… but you’re creating a larger and larger base of people who’ll never reach that point. ACA, $15 min wage, the high point this OT rule sets, etc all combine to do this.

    How great are these wages and benefits when we’re eliminating the whole point of what makes someone a family supporting worker? That is… jobs.

  9. wisconsin Conservative Digest says:

    Every time the govt. goes against the basic laws of economics, who loses? The geniuses on the east coast bought into all that crap about living wage so guess what. Raised the min wage and thousands lost their jobs. All the fast food type places are installing automation asap. In Milwaukee 57% youth unemployment. Think any changes put up by the ignorant of economics types will help them?? Throws the youth unto the streets to hustle fro a living, to be “my babies daddies” and help the family.
    Don’t understand why the left hates the working classes?

  10. Tim says:

    AG & WCD, you’re both assuming this will lead to a net loss of jobs, which is wrong. You keep saying this means people will be paid more… well, if people have more to spend, they spend it.

    A business would be stupid to fire people when their customers have more to spend.

    Anyways, this has devolved below facts so I’ll put it in terms that you can understand. I trust Obama & his jobs boom any day over tried & failed Republican policies that cut wages, benefits & ultimately the jobs of middle class America. I’ll make that choice every day of the week & twice on Sunday.

  11. AG says:

    Unfortunately, it only works like that in Timland.

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