National View: Millions of Americans unjustly work overtime without pay
Since 1938, we've had laws to protect workers from being forced to work overtime without getting paid for it. It's a simple principle: Pay people for the all work they do. The problem we face now is that the people who these laws were designed to...
Since 1938, we’ve had laws to protect workers from being forced to work overtime without getting paid for it.
It’s a simple principle: Pay people for the all work they do. The problem we face now is that the people who these laws were designed to protect are no longer being protected - millions of Americans are working overtime and not getting paid for it.
Hourly workers in most service and blue-collar jobs are guaranteed the right to overtime pay. If they work more than 40 hours in a week, their employers are required by law to pay them time and a half for the additional hours.
For salaried workers, the story is more complicated. Whether they are eligible for overtime pay is determined by their salary and the nature of their work.
Federal overtime rules are meant to exclude from overtime protections only workers who, because of their high pay and responsibilities, have enough authority and bargaining power within their workplace that they don’t need these protections.
We’re talking about professional and managerial workers who do relatively high-level work, have a high degree of control over how they spend their time, have a department and employees to supervise, and - here’s the critical part - who earn a salary that actually reflects this.
Federal rules mandating overtime pay set a salary threshold. Any salaried worker earning below this threshold is guaranteed the right to earn overtime pay. That means that no matter what your boss calls you - store manager, shift supervisor, assistant to the regional manager - if your salary is below the threshold, you must be paid time and a half if you work more than 40 hours in a week. This is a simple and important protection.
But here’s the problem. The salary threshold was never pegged to inflation, so it lost value and covers far fewer workers than it used to. The threshold today is only $23,660 a year. In 1975, it covered about 61 percent of all salaried
workers, but today it protects only 8 percent.
Here’s what that means in practice. Let’s take Jane. She works at a car wash and makes $25,000 a year.
She spends most of her time drying cars, but because she helps schedule her co-workers’ shifts and occasionally manages inventory, her boss gave her a job title of shift supervisor.
Most weeks she ends up working close to 60 hours, but because her employer calls her a manager, and because her salary of $25,000 is above the current threshold, she only gets paid for 40 of her 60 hours. Her boss has an incentive to say she’s a manager, because it means he can make her work extra hours without having to pay for it.
Luckily, President Barack Obama is considering a straightforward solution: raise the overtime salary threshold and index it to inflation. The threshold is meant to protect low-wage and middle-income workers like Jane from being taken advantage of by their employers, but it’s just too low to actually work.
The rule change the president is considering has another benefit: It will create more work, even new jobs, for hourly workers.
Faced with having to pay Jane and other first-line supervisors time and a half for their overtime, employers will shift the extra hours to lower paid employees who need the work.
Twenty hours of overtime that are free today will cost Jane’s employer $375 after the new rules are issued, but if the work is assigned instead to part-time hourly workers, it will cost only $200.
This a win-win: Jane works less for the same salary, and employees who need extra income are given the extra hours of work.
Even the National Retail Federation predicts the rules change will create tens of thousands of jobs.
Ross Eisenbrey is a vice president specializing in labor and employment law at the Economic Policy Institute ( email@example.com ). Readers may write him at EPI, Suite 300, 1333 H St. N.W., East Tower, Washington, DC 20005-4707.