A potential gamechanger for millions of Americans.
Obama signs a presidential memorandum on modernizing overtime protections. Mark Wilson / Staff / Getty Images News
Back when I was an executive editor working 12-hour days, I’d do this ugly sort of laugh-cry whenever my pay stub arrived. Sure, I had a fancy title, but after taking my total hours into account, I routinely earned less than minimum wage. Over and over, I found myself caught in a pathetic internal debate: Do I ask for more money, potentially souring my relationship with my employer? Do I suck it up, work the overtime hours demanded of me, and assume I’ll be “rewarded” with a bonus down the road? Or do I set boundaries and stick to working the eight-hour days that countless laborers before me fought so hard to achieve—and risk getting fired for having a terrible work ethic?
The concept of overtime for salaried workers in our always-on work culture is a minefield faced by millions of Americans every day, and one that President Obama just helped clear after years of negotiation. Tuesday night, he signed a presidential memorandum modernizing overtime protections, which might ultimately prove to be one of his most beneficial policies for the working and middle classes. Come December 1, workers making less than $47,476 annually will be automatically entitled to overtime pay for any work over 40 hours per week. (That adds up to 4.2 million employees receiving a fairer paycheck, according to the White House.)
Those late nights? Your company will pony up time-and-a-half. Coming in on Saturday? Your weekend might be ruined, but hey, at least you’ll be compensated for it. (And maybe the following weekend, you’ll feel like you can splurge a bit.) Thanks, Department of Labor!
Or not. Plenty of employers are already crying foul. “These rules are a career killer,” said David French, a senior vice president for the National Retail Federation, in a statement. “With the stroke of a pen, the Labor Department is demoting millions of workers.” By that, apparently, he means that salaried employees will now be classified as hourly workers, “depriving them of the workplace flexibility and other benefits they so highly value.”
Here’s how it works right now, according to Slate:
Hourly workers are almost always entitled to receive overtime pay. But salaried workers—that is, those in managerial or professional roles who are paid not by the hour, but at a flat rate—aren’t automatically eligible unless they earn under the threshold.
Christine Owens, executive director of the National Employment Law Project, a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers, said closing the title loophole is a major part of the updated overtime policy. “Because the rules governing exemptions from the Fair Labor Standards Act’s overtime law have not been meaningfully updated for more than four decades, far too many Americans have been working longer and longer hours for less and less money,” she says. “Current regulations give employers a major loophole for avoiding overtime pay, allowing them to classify workers earning as little as $23,660 as managers, though they have scant supervisory or managerial duties, and then require them to put in excessive hours, without any pay at all for their overtime hours.”
That $23,660 threshold, which hasn’t been updated since 2004, only covers 7 percent of eligible workers. Compare that to 1975 when the cap was $8,060—covering a whopping 62 percent of workers. So let’s say you’re in a prestigious-sounding job, earning a salary of about $30,000 a year (like I once did). Work 40 hours a week and you’re getting a little less than $15 an hour. Work 60 hours a week or more, like I used to, and your hourly rate drops to about $9 an hour. I often felt like my job title was inflated, but an “executive” editor is still a manager, and my duties (lowly or not) often meant that a 40-hour workweek was impossible. If bumping a manager up from $9 an hour to something still pretty close to $15 is an automatic “career killer,” then maybe that career deserves to be killed.
[quote position="full" is_quote="true"]There’s your capitalism in action. It’s the employer’s choice as to what they want to do: Pay more for you or pay less for more versions of you.[/quote]
Two common outcomes will arise from the new policy. Some employers, fearing a financial hit over those extra hours, will raise salaries to the exact threshold in order to avoid trouble. Others will cap worker hours and hire more employees. There’s your capitalism in action. It’s the employer’s choice as to what they want to do: Pay more for you or pay less for more versions of you.
Oxford Economics, a consulting firm working for the National Retail Federation, predicts that a “disproportionate number of workers will… see their hourly rates decreased by an equal amount, leaving their total earnings unchanged.” There’s no doubt many companies will try this, which is why we have a minimum wage in the first place, and why it’s important that number also goes up.
Perhaps the policy’s biggest win, even beyond more than doubling the overtime threshold, is the rule’s built-in guarantee that the ceiling will rise every three years based on the fortieth percentile for full-time, salaried employees in America’s lowest income regions. By tying the threshold’s number to actual earnings, future battles could be averted. It would be up to the anti-overtime legislators to repeal or lessen the protections, something conservatives are certainly for in theory, but a risky maneuver once workers get used to being fairly compensated.
President Obama happens to agree. “Americans have spent too long working long hours and getting less in return,” he writes. “So wherever and whenever I can make sure that our economy rewards hard work and responsibility, that’s what I’m going to do. Every hardworking American deserves a paycheck that lets them support their families, gain a little economic security, and pass down some opportunity to their kids.”
Of course, given the omnipresence of the gig economy, who knows how many full-time, salaried jobs there will even be in the future? After nights spent putting out fires where I didn’t earn an extra cent, I figured out that it made more sense to be a freelancer, to charge by item and by the hour, and, in my own minor way, require fair compensation for my work. If our favorite rappers were telling the truth, and time is indeed “for the money,” then an hour of labor deserves an honest rate. Work more than 40? There’s less life to live, so you deserve a little extra, and that is what Obama hopes to ensure well into the future.