Overdue for Overtime Pay Increase
By: Ceci Hall
Tags: Pay, Overtime, Labor, Federal Government, Money

Overdue for Overtime Pay Increase

US Labor Department brings back the conversation for a long overdue increase to overtime pay salary threshold. Ceci Hall Apr 12, 2019·4 min read

According to the Fair Labor Standards Act (FLSA), overtime pay is when non-salaried (non exempt) employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The salary threshold for overtime is $455 per week ($23,660 a year) and was last revised in 2004. Non-exempt employees earning less than $455 for 40 hours of work per week are eligible for time and one-half pay for hours worked over 40 during that week.

In 2016, a new rule was proposed and approved by the US Department of Labor to increase the overtime pay threshold for nonexempt employees from $455 per week to $913 ($47,476 a year.) This proposal raised it to a reasonable living wage and matched what many would consider the range where hourly pay (non-exempt) transitions to salary (exempt) at around $47,000 annually. This was blocked through an injunction by a federal Judge Amos L. Mazzant III in Texas shortly before it was due to take effect December 1, 2016. This injunction stemmed from the concern that this increase of salary range included specific types of job duties (executive, administrative, professional) that are currently exempt from overtime.

Excerpt from Judge Amos L. Mazzant III explanation;

“…this significant increase to the salary level creates essentially a de facto salary-only test. For instance, the Department estimates that 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, will automatically become eligible under the Final Rule without a change to their duties…”

This comment highlights how a deeper review is needed regarding overtime rules including revising the outdated specific job duties exemption. A graphic designer earning $24,000 a year could be exempt from overtime because they could be considered performing ‘professional’ job duties. However instead of updating specific duties, the US Department of Labor pops back into the conversation three years later with a proposal that seems even less thought out.

On March 7, 2019 the US Department of Labor issued a Notice of Proposed Rulemaking to increase the salary threshold for overtime to $679 per week. That’s a new qualifying salary level of $35,308 per year. Certain positions that are administrative, professional or management remain excluded (see list.) If not excluded, this means that under the new proposal employees making less than $679 per week would be eligible for overtime pay for hours worked that are over 40 for that week. Basically three years later a weaker rule is proposed that according to the Economic Policy Institute leaves 8 million people out who would have been included as part of the requirements proposed in 2016.

Also interesting to note that the threshold amount for what is considered Highly Compensated Employees (HCE) increased even more in the new proposal than in the approved rule from 2016. With this latest proposal, the HCE currently-enforced level of $100,000 is increased to $147,414 per year, whereas in 2016 it was increased to $134,004. Highly compensated employees are less economically in need of this increase. They are less likely to be exploited to work excessive hours at an hourly rate for less pay. This greater increase is unnecessary and does not benefit the people these rules are intended to protect.

Without a doubt, an increase in the salary threshold for overtime is long overdue. The latest proposal is inadequate to address a living wage but it is an improvement. If this proposed rule is approved, it is still possible for an employee with a salary of $36,000 to be required to work 50, 60 or more hours a week and not be compensated for what would be considered overtime.

Do we push back or accept this now and continue pressing for more? It has been fifteen years since the salary threshold for overtime has been revised to address the increased cost of living. Every year it remains at $455 a week is unacceptable and the increase necessary to match a living wage grows greater.

It’s important to note that some states are more advanced on overtime laws than what is required at the federal level, like Alaska, California, Nevada and Colorado. And other states have less stringent laws or no specific requirements at all like Alabama, Florida, Kansas, Louisiana, Mississippi, Oklahoma, South Carolina, Texas, Utah and Virginia. As with all legislation there are exclusions and this also varies by state.

Take Action Now

Weigh in on the federal proposal, public comments are being accepted through May 21, 2019. Got to www.regulations.gov, and enter comments in the rulemaking docket RIN 1235-AA20. Comments show there is public interest which makes this more of a priority.

2. Vote for and support elected officials with a record of advancing labor rights, pay equity and a living wage. Every year there are labor related measures, bills and acts that have a positive (or negative) effect on American workers. As voters, we have immense influence on the outcome.

3. Support labor unions. Their sole purpose is to represent employees in advancing fair wages, compensation and securing a safe work environment. Unions are very engaged in supporting labor legislation and rules that benefit many, even if not specific to their industry. They also hold employers accountable for unethical or illegal business practices.