Today, the U.S. Department of Labor published a notice of proposed rulemaking to raise the salary overtime threshold. Under the proposed rule, salaried workers making less than $1,059 per week—or $55,068 per year for a full-time, full-year worker—would become automatically eligible for overtime pay when they work more than 40 hours in a week, even if they are a manager, supervisor, or highly credentialed professional. The proposal also calls for indexing the threshold going forward, providing automatic updates every three years to ensure that the threshold’s protection does not diminish as prices and wages in the economy rise.
The proposed salary threshold is modest and well within the boundaries of historical precedent. But because the threshold has not been properly updated for almost half a century, the proposal—if finalized—would benefit millions of workers. In particular, it would provide new overtime protections to 3.6 million workers, and it is projected to increase the wages of working people by $1.3 billion annually.
“EPI is encouraged to see this important regulation move forward. The overtime threshold has not been properly updated for nearly 50 years, robbing millions of workers of their basic wage and hour rights under the Fair Labor Standards Act. Currently, a worker making just $36,000 a year can be required to work 50- or 60-hour work weeks with no additional pay. This proposal would ensure that employers have ‘skin in the game’ when they ask these workers to work long hours. As a result, these workers will either get those extra hours back or they will get higher wages when they do work long hours—whether through salary increases or by earning time-and-a-half overtime pay. This proposal is a crucial step in creating a stronger, fairer economy,” said EPI President Heidi Shierholz.
As former Chief Economist at the U.S. Department of Labor from 2014–2017, Shierholz worked closely on the Department’s economic impact analysis for the 2016 overtime regulations that would have extended and strengthened overtime protections for millions of workers. Unfortunately, that regulation was first challenged in court by both conservative state attorneys general and by the business lobby, overturned by a Texas district court judge, and then was ultimately replaced by a Trump administration rule at a lower threshold level that still leaves millions of workers without urgently needed protections and without billions of dollars in potential wage increases.