Trump Administration’s Proposal Would Slash Overtime Threshold by $12,000+ Per Year.
When you work long hours at your job, you get paid overtime – right? At least that’s the way it used to be. In the 70s, more than 60% of America’s full-time salaried workers earned overtime pay when they put in over 40 hours per week. But now, that number has dropped to just 6%.
Workers are faced with a double-barrel threat to their general wage and overtime pay rights:
1) Outright wage theft by employers who fail to follow the rules and pay legally-owed overtime pay by misclassifying jobs as overtime exempt or as independent contractors, or using schemes such as day-rate pay.
2) A legal playing field that is increasingly tilted towards employers’ interests – in the courts, federal agencies and the legislature. When the laws, and those responsible for enforcing them, allow employers the opportunity to get away with cheating workers out of overtime pay and other benefits, they will do it…and if they don’t, others will and thereby gain an unfair competitive advantage. Employers who lower their labor costs (legally or illegally) can be more competitive on prices and/or increase their profits.
What They Really Mean by “Job Killing Regulations”
The stronger overtime protections sought by the Obama Labor Department in 2016, would have increased the overtime salary threshold from the current $23,660 to $47,476 and to approximately $51,000 by 2020 through automatic adjustments. All workers making less than the minimum would be legally entitled to overtime pay. Republican-led states, and business interests opposing “Job Killing Regulations”, sued to stop the salary increase and blocked the 2016 rule in the courts. What they were really opposing was an increase in wages (labor costs) that cut into corporate profits. Then, instead of standing up for workers as he said he would do while on the campaign trail and defending the rule, the Trump administration sat on its hands — costing workers more than $1.6 billion in lost overtime pay.
The New Proposal – Let’s Cut the Overtime Salary Threshold by $12,000+ Per Year.
Now, the Trump administration has come out with its proposal that would dramatically weaken the 2016 overtime rule — leaving out more than 8 million workers who would have gotten overtime protections under the 2016 rule.
The new proposed rule would increase the minimum salary threshold to qualify for exemption from the overtime provisions of the Fair Labor Standards Act (“FLSA”) from $455 per week ($23,660 annually) to $679 per week ($35,308 annually) – which is over $12,000 per year less than the prior proposed increase. The proposed rule would also raise the threshold for “highly-compensated employees” from $100,000 annually to $147,414 per year. The proposed rule will be open for a period of public comment and is expected to go into effect in January of 2020. These salary amounts would be reviewed every four years, after a public notice-and-comment period.
The proposed rule also helps employers by allowing them to:
- Use certain nondiscretionary bonuses and commissions to satisfy up to 10% of the minimum salary requirement. Eg: $679 per week salary/guarantee could be composed of $611.10 plus at least $67.90 in incentive compensation.
- Make a final “catch-up” payment within one pay period after the end of each 52-week period to bring an employee’s compensation up to the required level.
- Use lower salary thresholds for employees in Puerto Rico, the Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands ($455 per week), and American Samoa ($380 per week).
Wage Theft Costs More than You Think
Workers routinely underestimate how much they may be owed in back overtime pay and “liquidated damages” (double damages). Our overtime pay calculatormakes it a bit easier to get an idea of the amounts potentially at stake.
When hundreds or thousands of employees are impacted by violations of the wage payment laws, the costs to workers are huge…as are the unfair gains to employers. Nothing, however, happens to correct the situation unless and until one or more employees do something about it. When internal questions about pay practices are ignored or dismissed without good answers, employees must look elsewhere for answers and advice, including unions, the department of labor, and private employment law attorneys who handle wage claims (on a contingent-fee basis). Do something about the new DOL overtime rule proposal – Speak out and submit a comment urging the Labor Department to reject the Trump administration’s proposed rule change that leaves millions of working people behind.
What to Do If You Are Being Cheated Out of Overtime Pay
Workers should remember that the general rule under both federal and state labor laws on overtime is that almost all types of compensation must be included in the regular rate, which is then multiplied by 1.5 to calculate the rate for each overtime hour. If you are not being paid 1.5 times your regular rate of pay for all overtime hours and/or certain types of compensation are not being counted towards your regular rate on which overtime pay is based, or if you are not sure that your overtime pay is being calculated correctly, contact us for a free and confidential review of your specific situation, and to see how much you may be owed in back pay.