Labor Department Seeks to Make More Eligible for Overtime

Labor Department Seeks to Make More Eligible for Overtime

The Labor Department is proposing to expand overtime eligibility to include most salaried workers earning less than about $35,000 a year.

The new threshold would be substantially higher than the current level of about $23,700, but would cover fewer workers than an Obama administration initiative that was thrown out by a federal judge.

Under the proposal announced Thursday, most workers earning less than the new threshold must receive time-and-a-half pay when they work more than 40 hours a week.

The department anticipates that the rule will expand overtime eligibility by just over one million workers, assuming their employers don’t adjust their salaries or work schedules in response.

The Obama administration argued that its proposal was modest by historical standards, noting that it would make fewer than 40 percent of salaried workers eligible for overtime pay based on their salaries, far less than the percentage who were eligible in 1975.

Even so, it estimated that more than four million workers would gain the right to overtime pay under its rule.

Other skeptics argued that the change would have little impact because employers would lower the base wage of people who work significant overtime hours, leaving their total pay, including wages and overtime, roughly unchanged.

More liberal economists largely rejected this analysis and concluded that while base wages might fall somewhat, the increased overtime pay would more than offset the losses.

Employees who make more than the salary threshold are also eligible for overtime pay if they aren’t executives, administrators or professionals — that is, workers who have significant decision-making authority. But the Obama administration believed that employers were routinely flouting this so-called duties test by labeling rank-and-file employees as managers, making a high salary threshold more important.

The Trump administration’s original nominee for labor secretary, the fast-food executive Andrew F. Puzder, was openly hostile to the Obama overtime rule. But after he withdrew his nomination under a personal controversy, his replacement, Alexander Acosta, struck more of a middle ground.

At his confirmation hearings in 2017, Mr. Acosta suggested that a reasonable salary threshold would be in the low $30,000s.

Last year, Mr. Acosta’s department held a series of public “listening sessions” to solicit input from employers, business groups and worker advocates on where to set the threshold. Many in the business community echoed his $30,000-plus suggestion, while worker groups tended to favor the Obama threshold.

“At my confirmation hearings, I committed to an update of the 2004 overtime threshold, and today’s proposal would bring common sense, consistency and higher wages to working Americans,” Mr. Acosta said in a statement.

In addition to raising the salary threshold, the Obama administration’s approach also required that it rise automatically every three years to keep up with salary increases. The new proposal does not seek to raise the threshold automatically, but suggests that it be updated through a new rule-making process every four years.

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