Economy

Why You May Finally Get Overtime Pay (Whether Congress Likes It or Not)

March 23rd 2015

By:
Sarah Gray

President Obama is expected to announce a much-awaited update to the nation's outdated overtime rules some time this year.

Last March, the president instructed Labor Secretary Thomas Perez "to begin the process of strengthening overtime pay protections for millions of workers to help make sure they are paid a fair wage for a hard day’s work while simplifying the rules for employers and workers alike."

The Fair Labor Standards Act of 1938 established overtime pay, but the threshold for receiving it remains woefully low. The overtime wage threshold has not been raised since President George W. Bush raised it in 2004. President Obama is expected to issue an executive order "relatively soon" to raise the salary threshold so that more workers can qualify for overtime pay if they work more than a 40-hour work week. "So long as their salaries are above the low threshold, employers can work them as long as they want while paying only the base salary," the Huffington Post explains.

Currently, that salary threshold stands at $23,660 per year, or $455 per week. In a letter, Senate Democrats asked that President Obama raise the threshold to a salary of $56,680, and some House Democrats want an even higher salary threshold of $69,000. Labor leader Richard Trumka, president of the AFL-CIO, stated earlier this year that he hoped for a $51,168 threshold to make up for inflation. This number would provide about 6.1 million more people with overtime pay. Their worry, according to People's World, is that the Labor Department will set the number at $42,000.

The greatest obstacle is the business lobby, which opposes a high threshold. The New York Times reported: "In 2004, business groups persuaded President George W. Bush’s administration to allow them greater latitude on exempting salaried white-collar workers from overtime pay, even as organized labor objected."

The other challenge is to make sure that companies don't skirt overtime rules by giving an employee the title of "manager" -- even if they perform manual labor -- to avoid paying overtime.

"What we’ve seen is, increasingly, companies skirting basic overtime laws, calling somebody a manager when they’re stocking groceries and getting paid $30,000 a year," President Obama said in an interview with the Huffington Post. "Those folks are being cheated."

It is unclear whether President Obama's executive order on overtime rules will apply to hourly workers, who often experience overtime wage theft. According to a 2014 report from the Hart Research Association, 60 percent of fast food workers have been asked to do tasks before clocking in and after clocking out, 48 percent of fast food workers have not been paid for the total number of hours they worked, and 26 percent did not always receive their time-and-a-half overtime pay. Fast food workers face multiple forms of wage theft, including having the cost of their uniform deducted from their pay and having missing item costs deducted from pay. The Hart Research Association reports that 89 percent of fast food workers have experienced some form of wage theft. Similarly, Amazon workers filed suit against a temp agency for not paying them for time spent waiting for required security screenings. In 2014, the Supreme Court ruled unanimously that the workers should not be paid during these screenings.