Ahead of new overtime regulations expected to be released by the Labor Department next month, the National Employment Law Project is calling for strong reforms to ensure workers are compensated fairly for the long hours they work. Progress Illinois takes a closer look at the issue and the group's recommendations.
Ahead of new overtime regulations expected to be released by the U.S. Labor Department next month, the National Employment Law Project (NELP) is calling for strong reforms to ensure workers are compensated fairly for the long hours they work.
"Reform of the nation's overtime rules is much needed and long overdue," Judy Conti, federal advocacy coordinator at NELP, a national worker advocacy organization, said in a recent statement. "America's workers are putting in longer hours, working harder and harder, but they're not getting ahead. Updating the nation's overtime rules, so that more middle-class workers can be fairly compensated for their long days and nights at work, is one important way we can begin to reverse the deterioration of middle-class wages and living standards that threatens our nation's prosperity."
The Labor Department plans to put forward new "white-collar" overtime pay regulations in February, following orders from President Barack Obama back in March to revise the eligibility rules. The changes under consideration seek to expand overtime eligibility to a number of salaried executive, administrative and professional workers, such as retail supervisors and food service managers, who are currently exempt from collecting overtime pay if they make more than $455 per week. That's an annual salary of $23,660, slightly less than the poverty level for a family of four at $23,850.
As part of the president's orders, Obama directed the Labor Department to lift the overtime salary threshold by an unspecified amount. The updated overtime rules will have to go through a public comment process before being adopted.
NELP, which issued a recent report detailing its recommendations on overtime reforms, wants the federal government to "significantly" raise that overtime-triggering salary level, which has not been "adequately" adjusted for inflation since 1975. If the 1975 salary threshold had been adjusted annually for inflation, it would have been $984 per week, or $51,168 per year today, according to the report.
Bumping up the salary threshold to $984 per week would expand overtime protections to 6.1 million low-wage salaried workers in supervisory, managerial, and professional occupations, according to a separate analysis by the Economic Policy Institute, a nonpartisan think tank. EPI's research shows that just 3.4 percent of salaried, white-collar workers who work full-time are currently eligible for overtime, or time-and-a-half pay for hours worked beyond 40 hours per week. That 3.4 percent figure would jump to 32.9 percent under the $984 salary level, EPI found. According to the Center for American Progress, only 8 percent of today's full-time salaried workers as a whole are eligible for guaranteed overtime.
Workers who would benefit the most from an updated overtime threshold include those in lower-paid, white-collar jobs who tend to have fewer benefits, including customer service representatives, social workers, retail worker supervisors, food service managers and others, according to EPI's report.
"Many of these workers are barely able to make ends meet," EPI economist Heidi Shierholz said in a news release accompanying the think tank's overtime study from September. "If you're just scraping by, you'll do whatever your boss tells you to do. That's why these workers need legal protections -- to prevent abuses by employers that hold all the cards."
Regarding employer "abuses," NELP argues that the current overtime regulations are problematic because they don't fully safeguard workers from being misclassified under white-collar overtime exemptions.
"Many who are classified as exempt white-collar workers are in fact doing manual labor and working long hours that affect their health and well-being," reads NELP's report, adding that current overtime rules "afford too much leeway for employers to misclassify employees who are not truly managers in any meaningful sense of the word or who do not exercise independent discretion."
NELP is urging the Labor Department to "specify that workers must exercise real independent judgment in how to do one's job" in order to be exempt from overtime pay. To put it another way, the group says that workers should be eligible for overtime if they have to abide by "a strict and inalterable set of steps for each task, or if tasks are dictated to the worker, or if the employee cannot truly independently decide how to perform the job duties."
Finally, the updated rules should include a clear standard that white-collar, overtime-exempt workers cannot spend more than half of their time doing non-exempt work, like a retail manager working the cash register or taking inventory, NELP recommends.
"The current regulations provide no such definition, giving employers the incentive to give workers scant qualifying duties and still exclude them from overtime coverage," the report says. "Using the concept of "concurrent duties," the current regulations permit exempt employees to spend the vast majority of their time doing non-exempt work while they simultaneously supervise or manage other employees."
Some critics of lifting the salary level that triggers overtime pay argue it could reduce work flexibility among salaried employees. Among other concerns, skeptics claim that employers might cut their workers' regular wages to offset overtime pay.
The National Federation of Independent Business is at least one organization blasting the planned overtime revisions as "anti-business."
"The president's plan to increase overtime pay demonstrates another anti-business policy -- coming on the heels of a proposal to increase the minimum wage, increase the minimum tipped wage, rising health care costs, as well as ever-growing, costly and unwieldy regulations," NIFB spokesman Eric Reller said last year in response to Obama's announcement on the impending changes.
Conti believes current federal overtime regulations fall short for the nation's workers, and they need to be modernized.
"We need to raise the ridiculously low $455-per-week overtime salary threshold, and we need reforms that prevent employers from misclassifying workers as exempt in order to get away with not paying overtime," she stressed. "It's a matter of simple fairness, but it's also a move that will strengthen America's middle class and help begin to reverse decades of wage declines and economic inequality. We're hopeful that the administration will propose strong reforms that really address these problems head on."