Make under $35,500 a year? You may be owed mandatory overtime pay soon
Workers making less than $35,500 are now entitled to mandatory overtime pay from their employers, under new rules announced by the Department of Labor Tuesday. The new rules will take effect at the beginning of 2020.
The rules raise the salary threshold for workers for whom overtime pay -- 1.5 times a worker's typical hourly rate -- is required from $23,600, a standard set in 2004 during the George W. Bush presidency.
The Department of Labor under President Barack Obama tried to raise the threshold to $47,000, a shift that would have given overtime pay to four million additional workers. But that proposal was met with strong opposition from business groups like the Chamber of Commerce, as well as Republicans.
A federal judge in Texas halted the rule's implementation in 2016 in response to lawsuits filed by both the Chamber of Commerce and other business groups. A group of Republican attorneys general also attempted to block the Obama administration proposal.
Instead of fighting the court ruling, the President Donald Trump's Department of Labor unveiled the current proposal in March under then Labor Secretary Alex Acosta, bringing the salary numbers more in line with the expectations of business groups.
On a briefing call with reporters on Tuesday, Department of Labor officials said that the new threshold would allow 1.3 million additional workers to be given overtime pay compared to the current levels.
"More overtime pay for American workers is a positive step forward," acting Labor Secretary Patrick Pizzella told reporters.
"The rule from 15 years ago was overdue, most businesses supported increasing it somewhat," said Tammy McCutchen, a lawyer who represented the U.S. Chamber of Commerce, the country's most prominent business lobbying group, in its lawsuit against the previous rule. "I think $35,000 is a really good compromise, and it's going to work across the country."
McCutchen said that opposition to the Obama-era proposal was driven by concern about how it would affect jobs in the Midwest and South, as well as the nonprofit, government, health, retail and restaurant sectors.
Liberal economists, Democratic officials, and worker advocates had all opposed the DOL's new rule.
"What we saw today was not unexpected," Heidi Shierholz, the director of policy at the Economic Policy Institute and a former chief economist at the Department of Labor under President Obama. "It is a doubling down of this administration siding with corporate executives instead of workers."
The new rules are only the second update to the threshold since 1975, after the 2004 change.
Critics point out how far the United States has departed from historical norms. In 1975, the salary threshold covered 60 percent of salaried employees, while the current $23,600 standard represents about seven percent, according to data from the left-leaning Economic Policy Institute. The Obama proposal would have raised that percentage to 33 percent, while the Trump administration's rule will represent 15 percent.
The new rule was vigorously opposed by a group of 23 Democratic senators, including all of the 2020 candidates from that chamber: Bernie Sanders, Amy Klobuchar, Elizabeth Warren, Cory Booker and Kamala Harris.
The senators had called for the Department of Labor to defend the rule it proposed under President Obama.
"DOL is disingenuous in acting as though rescinding the final rule and proposing a weak rule are its only options; DOL can, instead, defend both the 2016 rule and the Secretary's authority," they wrote.
The Obama administration's rule would have required the threshold to be updated every four years, in line with inflation. The new rule does not include the same stipulation.
Judy Conti, a director at the National Employment Law Project, said she believed that the Department of Labor had failed to act in the interests of its workers.
"The Trump administration is trying to portray this as some great gift to workers, but in fact it's a rollback," she said. "Nobody should be fooled into thinking this is pro-worker. What this does is it locks in a low threshold at the behest of the business community."