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

The Big Rig Overhaul: Restoring Middle-Class Jobs at America’s Ports Though Labor Law Enforcement

Our research found the dire working conditions of port truck drivers to have flowed from the practice of treating employees as if they were ‘independent contractors,’ an illegal practice called misclassification. At the time of our first report, there were practically no official government investigations to verify our findings despite a host of enforcement agencies being responsible for preventing misclassification.

That has now changed. Our findings match those coming from recent investigations of employment practices common in the industry by the United States Department of Labor, the Internal Revenue Service, the National Labor Relations Board, and various state agencies. More importantly, these investigations signal a new dynamic, one with practical ramifications for the organization of work in the industry as well as for broader discussions of inequality in this country.