The Building Tradesman Newspaper

Friday, March 22, 2019

Watered-down overtime rule stops higher pay for 2.8M U.S. workers

By The Building Tradesman

WASHINGTON - The U.S. Labor Department earlier this month released a proposal to expand overtime pay for eligible workers, but at a rate about half of the standard proposed under the Obama Administration.

Under the current standard for a non-supervisory worker who toils 40 hours a week, eligibility for overtime pay is required to be paid if that worker earns less than $23,600 per year. In 2014, President Obama directed the Labor Department to update the overtime regulations in the Fair Labor Standards Act, and broaden OT eligibility to those who earn up to $47,476 per year. Importantly, that rule would have also implemented future increases indexed to the inflation rate.

In May 2016, after receiving more than 270,000 comments, the Department of Labor issued a final rule that raised the minimum salary threshold to that same $47,476 per year. But a big-business-backed lawsuit protesting the higher eligibility rate was subsequently upheld by a U.S. District Court judge in Texas, so the new rate was never implemented, and the Trump Administration had the case dismissed in 2017. The court said the White House improperly looked at salaries instead of job descriptions when determining who was eligible for overtime pay.

This month, Trump's Labor Department re-started the process and proposed to raise the rate at which overtime is paid to those who earn less than $35,308 per year. Overtime wages are defined as 50 percent extra hourly pay for employees who work more than 40 hours in a week.

"The adoption of this new rule would leave behind millions of workers who would have gotten overtime protections under the 2016 guidelines," said Heidi Schierholz of the labor-back Economic Policy Institute (EPI) "We strongly oppose this and any efforts to weaken the criteria set forth in the 2016 final rule for defining who qualifies for exemption from overtime protections. DOL does not need to undertake a new rulemaking - they just need to defend the 2016 rule, and support middle-class workers who badly need a raise."

The EPI said those 270,000 public comments contributed to a "painstaking determination of the threshold in the 2016 rule" and that threshold "is well within historical norms." If the rule had simply been adjusted for inflation since 1975, today the standard would be $55,000, the EPI said.

AFL-CIO President Richard Trumka, called the new rule, which shuts out about 2.8 million workers from expanded overtime eligibility, “disgraceful," and "is part of a growing list of policies from the Trump administration aimed at undermining the economic stability of America’s working people."

Many business leaders don't have a problem with an increase, but they didn't like the extent of the Obama-era increase. Tammy McCutchen, a management lawyer who oversaw a change in the threshold during the Bush Administration, told the New York Times that anything higher than the Trump increase "would have been subject to (a legal) challenge again.” 

And a legal challenge may happen anyway. If the Fair Labor Standards Act is modified, and there are no more lawsuits, then the new threshold would take effect Jan. 1, 2020.