Time to Expand Overtime Pay

If paid family leave is out of the reconciliation bill, Biden’s best move is something he can do without Congress’s, um, help.

By Rebecca Dixon Heidi Shierholz

Tagged EconomicsOvertime

With the news last week that the Biden Administration’s historic paid leave proposals have been stripped from the reconciliation package, pressure is on the Administration to use other avenues to improve work-life balance for struggling families. A key first step should be restoring the 40-hour work week by ordering the Labor Department to issue much stronger regulations that bring back overtime pay coverage for the majority of the salaried workforce that used to be protected.

New research from the World Health Organization shows that workers who put in more than 55 hours a week are much more likely to die from strokes and heart disease. Workers, especially women, who juggle a full-time job with child or elder care are reporting high levels of stress and burnout, with record numbers considering leaving the workforce. Meanwhile, millions more service workers have lost their jobs and are still struggling to find work—at the same that employers are making their current employees work long hours, complaining that they are having difficulty hiring new staff.

As we reckon with the future of our economy, we cannot allow overwork to remain the status quo for some while at the same time 4.5 million workers who want full-time work can only get part-time hours. Rather, it’s time to bolster overtime protections for workers. Doing so is a crucial and practical step for reducing family strain and improving work-life balance for millions of workers, while encouraging employers to hire new workers.

The 40-hour work week, and the right to time-and-half pay for hours beyond that, was a historic labor protection, passed during the New Deal to reduce overwork and to spread employment to more workers. But in recent decades, the share of full-time salaried workers eligible for overtime pay based on their earnings has been declining: from 63 percent in the 1970s to just 15 percent today.

Why? Because the U.S. Department of Labor hasn’t regularly updated the salary level below which workers are guaranteed overtime, which, under a Trump-era rule, is just $35,568 a year. And they’ve failed to close loopholes that greedy employers continue to exploit. As a result, large numbers of low- and mid-level salaried workers, many of them women, routinely work 50-, 60-, even 70-hour weeks, getting pulled away from their families for no extra pay.

Corporate giants in particular are notorious for deliberately understaffing and relying on low-paid, salaried managers working overtime. As Paige Murdock, a Dollar General store manager from Eliot, Maine explained, “Because our overtime hours are free for the company, they make us work 60 to 70 hours a week. I was working so much I couldn’t make it to my church. My family was always asking, ‘Why aren’t you at home, Mom?’ And most of my hours weren’t even spent managing the store, but instead stocking shelves or running the cash register since we never had enough staff.”

Michael Ortiz, a former shift manager at an Amazon warehouse in the San Francisco Bay Area, shared similar experiences. “When we were hired, we were told we would be managers working on high-end things,” Mr. Ortiz said. “In reality, the bulk of the managers got stuck doing very tedious work.”

Many exploited salaried workers like Murdock and Ortiz could still be eligible for overtime pay despite their “manager” titles. To be exempt from overtime, workers must both be paid more than the salary threshold and be primarily responsible for high-level job duties. Many “manager” positions at companies like Dollar General don’t meet that second requirement. But it’s very difficult to enforce since the burden is on workers to come forward about violations, and doing so is incredibly risky under our at-will employment system.

The overtime salary threshold is designed to provide a clear, more easily enforceable floor for those workers whose pay and duties entitle them to be paid overtime. But the rule is out of step with today’s wages, and employers have learned to skirt around it.

We need to right-size overtime protections for today’s economy. The salary cap established by the Trump Administration is far too low, and it leaves behind large groups of workers whose employers routinely misclassify them as overtime-exempt workers like insurance claims processors, IT support staff, and retail, restaurant, and hotel staff given cosmetic titles like “manager.”

Weak overtime protections also hurt the many workers who are involuntarily forced into part-time jobs for lack of better options. When employers can no longer overwork those who are exempt because of lax standards, they will be forced to spread work and hours across their workforce.

The Labor Department should follow the lead of states like Washington, which is phasing its overtime threshold up to $83,356 by 2028, an estimated $70,600 in today’s dollars. Labor should also restore overtime protections to the two-thirds of the salaried workforce that were protected in the past, and who desperately need more work-life balance. And it should ensure that, regardless how much they earn, only workers who truly spend most of their time on high-level duties or managing staff are exempt.

Restoring overtime protections is especially important right now, as our economy is still millions of jobs below where we were before the pandemic and many returning workers report employers demanding overlong hours. Furthermore, right-sizing overtime rules will pay dividends well into the future. We can support a just recovery by raising the overtime threshold and closing loopholes, easing the strain on workers and families.

Read more about EconomicsOvertime

Rebecca Dixon is the executive director of the National Employment Law Project (NELP), a national advocacy organization that fights for policies that dismantle structural racism and build worker power.

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Heidi Shierholz is the president of the Economic Policy Institute in Washington, DC. She is a former chief economist of the U.S. Department of Labor.

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