Overtime for Salaried Employees: New Rules Proposed

Department of LaborThe Department of Labor (DOL) is preparing to introduce new rules governing overtime pay this summer. The new regulations, which represent an historical reversal of a 50 year old trend, are very good news for salaried employees making between $23,600 and $50,440 per year.

You probably didn’t know that fifty years ago overtime pay was the norm for salaried employees, with more than 60% qualifying for overtime, compared to only 8% today. In fact, overtime pay has become such a rarity that many employees and businesses are totally unaware that a majority of salaried employees used to be eligible.

Today, if you are salaried and you earn more than $23,600 you are not automatically eligible for overtime. Under the new rules if you earn $50,440 a year or less you would be qualified to collect overtime pay (time and a half) for hours in excess of 40 hours per week.

This has been called a “minimum wage hike for the middle class” and will directly benefit 5 million salaried employees. Hourly workers would not be impacted by the new rules and would continue to receive overtime pay as they currently do.

Currently an assistant manager at a convenience store or fast food restaurant may be expected to work 50-60 hours a week and not receive any overtime pay. This means that they may end up receiving even less than the minimum hourly wage when all of their hours are taken into account.

A recent expose in the New York Times, which focused on the technology and retailing giant Amazon, makes it clear that white collar employees are just as vulnerable to being systematically required to work uncompensated overtime hours.

After decades of inflation and legislative indifference and inattention, the new DOL rules, if implemented, would represent a pivotal step in the service of greater income equality and fairness in the American economy.

In addition to raising the living standards for some of our hardest working fellow citizens, the new regulations would have an impact the problem of overwork.

A 2014 Gallup poll found that salaried Americans report working an average of 47 hours a week and 18% say that they work more than 60 hours weekly.

The proposed increase in the overtime salary threshold will lead many employers to reevaluate their options: they can decide to pay employees time and a half for the overtime hours or they can hire additional employees at the standard rate. If you are a salaried employee under the threshold, the first option would mean more pay and the second would mean more time for your family and personal life (and lead to higher employment levels in your community as well).

Businesses whose operations are predicated on low wages and exploitive scheduling practices will have to make adjustments to their business models if the proposed regulations are implemented. There will undoubtedly be an outcry, about excessive government regulation, from those businesses and the lobbyists and legislators who represent their interests.

When the complaining begins, remember that the overtime salary threshold has only changed twice in the past 40 years and  that this adjustment will make a significant difference in the lives of 5 million salaried employees and their families (56% are women and 53% have a college degree).

If we are genuinely committed to the goal of retaining a viable middle class in our country this policy change is long overdue and a meaningful step toward a more inclusive, fair and sustainable economy.

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