Middle-class workers got a rare win this week when the Obama administration moved to strengthen overtime protections for millions of salaried employees, including at least 79,000 in Minnesota.
Until now, workers making as little as $23,660 could be put on salary, requiring them to work unlimited hours in a week without overtime pay. That threshold will be lifted to $47,476. By Dec. 1, salaried employees below that level will be eligible for overtime after working more than 40 hours in one week.
That will prove a bit of a shock to some businesses that have become accustomed to requiring extra hours from lower-wage workers without providing extra pay. But it is a move long overdue for employees who have been forced to essentially donate their time to employers.
The overtime rule, which dates to the late 1930s, has been updated only infrequently over the years: once in 1949 and again in 2004, when the Bush administration — using the same rule-making authority as the Obama administration — tripled the salary threshold to $23,660. But in doing so, Bush considerably weakened other provisions of the rule, allowing millions of lower-wage workers to be classified as salaried employees exempt from overtime. Where the Fair Labor Standards Act had been strict about the type of executives, professionals or administrators who could be exempted from overtime, the Bush administration made the language more nuanced and, some said, more vague. Labor officials from the Carter, Reagan and Bush Sr. administrations warned at the time that the relaxed language went too far and could wind up depriving millions of workers of rightful wages.
They proved prophetic. In the ensuing years, there has been a shift toward low-wage salaried positions that get around overtime. Lawsuits have shown that shift managers at fast food or retail outlets can work 50- to 60-hour weeks while scraping by on salaries of $24,000, an amount actually below the federal poverty guideline for a breadwinner in a family of four. The flexibility a salaried employee might have does not offset hundreds of donated hours of labor a year.
No doubt the timetable for making these changes could be difficult for some businesses. While the Obama administration signaled as far back as early 2014 that it intended to update the overtime rule, there will be barely six months between the announcement of the details and the effective date. “It’s a pretty aggressive timeline,” said Bruce Nustad of the Minnesota Retailers Association. While acknowledging that an update was overdue, Nustad expressed concern that employers might have to take drastic measures that would hurt some employees, such as cutting wages or hours. It’s also worth noting that even after enacting a hefty minimum wage increase two years ago, Minnesota is at 3.5 percent unemployment, well below the national average of 5 percent. Workers are scarce here and good workers scarcer still.
But there are real costs to this much-needed shift that should give even its supporters some pause. Employers may have to redistribute workloads to ensure a 40-hour workweek, set aside money for overtime or possibly hire additional workers. There should be some recognition of the accommodations that must be made.
That said, the erosion of the middle class has reached intolerable levels in this country, and the change in the overtime rule restores a much-needed measure of balance.