The Department of Labor’s new overtime rule significantly increases the number of salaried workers who qualify for time-and-a-half pay for any hours they work beyond 40 in a week. Far too many salaried workers were not covered by prevailing overtime protections: While nearly half of all salaried workers were covered by the overtime threshold in 1975, that share fell to just 10 percent of salaried workers in 2014. This is because the salary threshold of $23,660 per year—the salary beneath which salaried workers are generally eligible for overtime protections regardless of duties— had not kept up with wage growth or inflation and was far too low.
Nearly one-third of salaried workers will be guaranteed overtime under the new rule, but that falls short of the half covered in the mid-1970s: Share of salaried workforce covered by the federal overtime salary threshold, 1975–2015
|Year||Share of salaried workforce covered under federal overtime salary threshold|
Note: The sample is limited to nonhourly wage and salary workers.
Excludes unpaid workers and self-employed.The count of covered workers exclude most named occupations (teachers, lawyers, judges, and various medical professions) as well as religious workers, who are not subject to the FLSA, but they're included in the count of the salaried workforce. Historical estimates of the share covered are benchmarked to EPI's 2015 estimate. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.
Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, various years
Raising the salary threshold from $23,660 to $47,476 will restore overtime rights to nearly one-third of salaried workers. Under the new rule, salaried employees making less than $47,476 a year must be paid overtime. The restored rule will benefit these workers in many ways—whether by getting paid time-and-a-half for all hours worked over 40 in a week, having their hours scaled back to 40 hours a week while still taking home the same pay, or getting a raise to put them above the salary threshold. This very positive move forward unfortunately does not restore the protections that were available in the mid-1970s when 49.6 percent of salaried workers had overtime protections, 16.6 percentage points greater than what the new rule covers.