A needed boost for workers
Posted on 06/18/15 in Work & Wages
The wait for a federal increase in the salary level that would require employers to pay overtime appears to be coming to an end.
The change would be good news for millions of workers who are not eligible for overtime for working more than 40 hours a week. Most employers are required to pay overtime to most all hourly workers, regardless of total wages. But for exempt employees who are paid a salary, employers must pay overtime (time and a half) only to those earning below $23,660 a year—a threshold that has only been changed once since 1975, according to NPR.
Last year, President Obama issued a memo that urged the Department of Labor to update the threshold. Several news outlets are reporting that the long-awaited announcement is coming soon. The increase could be to as much as $52,000, Politico reports.
Inflation has slowly diminished the share of Americans who are guaranteed eligibility for overtime, NPR said.
The Economic Policy Institute says that if the threshold for overtime pay is increased to $51,168 per year, 6.1 million white-collar workers would benefit. This increase would protect workers who “have limited individual bargaining power and would therefore benefit from the overtime protections.”
As a result, 32.9 percent of salaried, full-time workers in professional or managerial roles would be automatically covered by overtime protections. Today, only 3.4 percent of such workers are protected, a percentage that is clearly too low.
Janice Fine, a professor at Rutgers University, believes that many workers are exempted from overtime compensation today who should not be. She writes that there are a variety of low-earning workers classified as professionals, a label that exempts them from overtime compensation. As a result, “many restaurant workers, social workers, loan officers, computer technicians, office administrators, customer service reps, retail sales workers, and insurance clerks and agents, are all subject to the so-called ‘white collar exemption.’”
After years of wage stagnation, the increase cannot come soon enough.
-- Connor Lang
Connor is a Policy Matters intern