Working 9 to 5: Upgraded Overtime Rule Could Help Restore 40-Hour Work Week for Millions of Americans

Last week, the White House announced a long-anticipated new rule that upgrades Americans' access to overtime pay. Worker advocates, economists, and unions have been working with the Obama administration and U.S. Department of Labor for years to modernize the rules on overtime, and thanks to their efforts, millions of salaried employees will be paid for the work they do beyond the standard 40 hours per week.

What are the problems with the current overtime rule?

Americans are working harder than ever while corporate profits are skyrocketing, yet incomes are stagnant. A substantial portion of the increased hours that salaried workers spend on the job seems to be in the form of uncompensated overtime.

The current overtime rule requires that any employee (paid hourly or salaried) working more than 40 hours a week be paid time-and-a-half if they fall under a specific federal earnings threshold or work certain jobs. But the current threshold – $23,660 ($455 a week) is so low that it would leave a family of four living in poverty. The upgraded rule will more than double that threshold.

According to economists at the Economic Policy Institute, almost two-thirds of salaried workers were eligible for overtime in the mid-'70s, but today, only eight percent of salaried workers were guaranteed overtime pay. The Department of Labor hasn't adjusted the pay threshold for overtime work to account for the rising cost of living since 1975. So inflation has eroded overtime protections for millions of workers. About half these salaried workers are women; many have children.

Unscrupulous employers also take advantage of the weakened overtime protections and slack enforcement of the law to deny employees who already qualify from receiving overtime pay. Unethical employers classify some workers as “managers and supervisors” and pay them a salary instead of an hourly wage to avoid paying overtime. But many assistant managers spend a majority of their time doing work that is not managerial. When these employees are expected to work 50 or 60 hours a week, they may end up working for less than the hourly employees they nominally supervise.

Unpaid overtime is legalized wage theft. An assistant manager in a store or a restaurant who is paid an annual salary of $25,000 and routinely works 60 hours a week is working for just $8 an hour, less than the minimum wage in most states like Connecticut, Oregon, Florida, South Dakota and Ohio.

Who will benefit from the stronger overtime rule? Everyone.

The updated overtime rule will raise the threshold for overtime for salaried workers to $50,440 – meaning millions of workers will either be paid 50 percent more per hour of their ordinary wage for work beyond the normal 40 hours, and have more money for their families, or have more time to spend with their families. Overtime rules also ensure employers think twice before demanding long work hours from their employees. 

Anyone who isn’t a boss – an “executive or administrator” – or a “professional” and earns an annual salary of less than $50,440 (or $970 a week) will be eligible to receive overtime pay. An estimated 5 million new workers will immediately qualify for working overtime. With a shift to restore the traditional 40-hour work week, millions can spend more time with their families, volunteer in their communities, take a second job if so desired, and more.

The workers most likely to benefit from the updated rule are women, minorities, people under 35 years old, and workers with less education. But the children of these workers could be the biggest beneficiaries of the rule because their parents will now have more time to spend with them or more money to support them and be less stressed.

More money in the pockets of American workers can stimulate the economy. People may spend more at local stores and restaurants.  And some employers will hire new staff instead of pay overtime, reducing unemployment.

You can help push the overtime rule across the finish line.

The overtime rule is a change that the Department of Labor can make without legislation – it simply sets new rules for overtime. People have the opportunity to tell the Department of Labor how they feel about the rule and staff there are supposed to respond. We know opponents will send in negative comments. If you support the change, please talk with everyone you know about the proposed overtime rule and how it could improve the lives of people they know and others in your community – especially young workers and working parents.

And ask people to send a comment to the Department of Labor to let the agency know that you support the new rule and why. Explain how your life and your family’s life would be different if you only worked 40 hours a week or how your life would be better if you were actually paid time-and-a-half for all your extra hours worked. Check out the overtime calculator to figure out how much more you would make each week with the new overtime rule.

Big business and their lobby groups will try to turn the tide against the rule, but even they admit that the updated rule will create tens of thousands of new jobs. We need your voice to push back against big corporate interests and bring the overtime rule across the finish line. Please send in your comment today!

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This is a good ministep. But this overtime (OT) design still incentivates OT for employees with time&ahalf, and disincentivates employers from overtime less and less as more and more benefits get loaded onto each employee. We need a more efficient OT design that cuts right to the chase of converting chronic overtime into jobs - and training whenever needed. If that isn't enough to create full employment and its desirable results of rising wages and spending and sales and marketable productivity (= the sole source of investment solidity), then we adjust the workweek downward step by step as far as it takes to create as much convertible overtime as required for full employment. Details on
well written