Some five million white-collar workers who don’t currently get paid when they work overtime could be in line for protection. But if the Obama administration doesn’t get cracking, it could lose the moment.
Under the 1938 Fair Labor Standards Act, federal regulations governing overtime for hourly workers are pretty straightforward. If you work more than 40 hours in a week, you must be paid time and a half your regular rate for those extra hours. But salaried workers are covered by different rules, and overtime protections disappear for many managers or administrative staff under an exemption designed to recognize the different nature of office work compared with production or other blue-collar jobs.
[The $23,360 a year] cut-off was set in 2004 and is now $940 below the federal poverty line for a family of four. Hardly what most people would consider a management-level salary.
A key factor in determining whether salaried workers qualify for overtime protection is how much they earn. As it now stands, most salaried workers who have some managerial or administrative responsibilities and make more than $23,360 a year can be required to work extra hours without being paid overtime. But that cut-off was set in 2004 and is now $940 below the federal poverty line for a family of four. Hardly what most people would consider a management-level salary.
The federal Department of Labor has proposed changing the threshold so that it is no longer a set dollar amount that is regularly eroded by inflation. Instead, it would be pegged to the top of the 40th percentile of weekly earnings nationally for salaried workers — estimated this year to be $970 a week, or $50,440 annually.
Business advocates oppose the new overtime rule because they say it will increase companies’ labor costs, and their allies in Congress have introduced an objectionable (and we hope unsuccessful) bill that would bar the Labor Department’s new definitions, arguing that to do so would limit work site flexibility, reduce workers’ opportunities for advancement and lead to job losses. That’s disingenuous at best. As salaries have increased with inflation, employers have reaped the windfall from the outdated exemption level, and updating the threshold just means bosses will have to start paying employees for extra work the companies have been getting for free.
Thanks to the arcane rules of governance, the Labor Department’s proposed overtime rule faces a ticking clock. The department last week sent the new rule, which has already gone through a public comment period, to the Office of Management and Budget’s Office of Information and Regulatory Affairs for final approval, which is supposed take no more than 90 days. Once OMB approves the measure, and the Labor Department publishes it in the Federal Register, Congress gets a chance under the Congressional Review Act to override the new rule within 60 legislative days. Like any other congressional act, such an override is subject to presidential veto.
The new rule is an important restoration of overtime protections. OMB should move with all reasonable haste to approve it in time to ensure that if the Republican Congress tries to kill it, Obama would still be in office to defend it.
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