Overtime

Overtime pay rules are designed to ensure that most workers who put in more than 40 hours a week get paid 1.5 times their regular pay for the extra hours they work. Almost all hourly workers are automatically eligible for overtime pay, but workers who are paid on a salary basis are only automatically eligible for overtime pay if they make below a certain salary. Above that level, employers can claim that workers are “exempt” from overtime if their primary job duties are considered “executive,” “administrative,” or “professional.”

The pay threshold that determines which salaried workers are automatically eligible for overtime pay has been so eroded by inflation that workers earning as little as $455 per week (the equivalent of $23,660 per year) can be forced to work 60 or more hours a week for no more pay than if they worked 40 hours. The extra 20-plus hours are completely free to the employer, allowing employers to exploit workers with no consequences.

In 1975, more than 60 percent of full-time salaried workers were under the salary threshold and hence automatically eligible for overtime. By 2016, because of this erosion, the share had dropped to less than 7 percent. The new overtime rule would have partially restored that share, bringing it up to 33 percent.

A 2016 federal rule would have raised the salary threshold below which workers are automatically eligible for overtime pay—from $23,660 to $47,476 per year—restoring some of the coverage lost as inflation increasingly eroded this crucial worker protection. At $913 per week (or $47,476 for a full-year worker), the threshold that the 2016 rule set is equivalent to the 40th percentile of weekly earnings for full-time salaried workers in the lowest-wage U.S. Census Region (currently the South). It is a significant but still conservative boost, approaching a level of pay that a modestly compensated manager might have.

However, a district court in Texas blocked DOL from implementing and enforcing the rule in 2016 and then, in August 2017, held that the rule was invalid.  As it becomes clear whether this ruling will, in effect, kill the overtime rule, some states are considering implementing their own revised overtime eligibility threshold to restore overtime protections to workers.

In 1975, more than 60 percent of full-time salaried workers were under the salary threshold and hence automatically eligible for overtime. By 2016, because of this erosion, the share had dropped to less than 7 percent.

Publications

Valuing Our Time: Strengthening New Jersey’s Overtime Law

A prosperous New Jersey depends on the livelihood of all our workers. In fact, the state economy benefits most when workers are able to earn fair pay for all the hours they work while balancing employment responsibilities with family obligations. However, millions of people across the nation, including hundreds of thousands in New Jersey, are not covered by overtime protections and risk being exploited for their time.[i] This is a direct result of federal overtime laws that have eroded over time—and the lack of a strong state overtime law—where far too many workers are exempt from the right to earn time-and-a-half when they work over 40 hours a week.

Currently, some salaried white-collar workers who earn more than $23,660 a year can be legally denied overtime pay. These exempted workers (1) are considered “highly compensated,” earning at least $455 per week ($23,660 per year), (2) have primary office or non-manual duties, and (3) pass the “duties test,” a complicated test of employees’ tasks and responsibilities that establish them as a bona fide executive, manager, or highly trained professional.[ii] The federal overtime salary threshold for these exempted workers will increase to $35,568 in 2020, but this still falls significantly short of historical standards.

It’s About Time: Modernizing the Massachusetts Overtime Law Would Help 435,000 Salaried Workers

Everyone deserves fair pay for the hours they work, and the freedom to have a personal life away from the job. The more we work, the less time we have for ourselves, our families, and our communities. That’s why we have federal and state overtime laws, which require that most workers be paid time-and-a-half for every hour they work over 40 in a given week. It’s a straightforward bargain: when workers give up scarce personal time for their job, that time becomes more valuable. Employers then have to balance their demand for more hours from their employees with the increased costs of such a demand.

Unfortunately, this bargain has broken down when it comes to millions of modestly paid salaried workers across the country, including hundreds of thousands in Massachusetts. Almost all workers paid by the hour are automatically covered by overtime protection. For workers paid a salary, however, weak, outdated, and confusing overtime laws make it easy for employers to require them to work 50, 60, or more hours in a week without paying them anything more than if they had worked 40 hours. When this happens, salaried workers end up sacrificing their personal time—for free.

Maine bill to fix overtime will restore the promise of extra pay for extra work

When Mainers work extra hours, they deserve extra pay. The 40-hour workweek has been a pillar of the American economy for decades. It’s still what most of us envision when we think about a “full-time job.”

If the 40-hour workweek is one side of a coin, overtime protection, which provides time-and-a-half pay for hours worked beyond 40, is the critical flip side. Overtime pay buttresses the 40-hour workweek as a norm. It ensures full-time workers can expect a decent work-life balance and will be compensated when that balance is thrown off. But outdated and difficult-to-enforce overtime laws mean many Mainers are stuck with lower wages even if they’re willing or required to work long hours.