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DOL to expand eligibility for overtime pay

This week the President and the Secretary of Labor announced that the U.S. Department of Labor (DOL) would be updating overtime regulations so that approximately 5 million more workers would be eligible for overtime pay, including a reported 20,000 workers in Maine. The Fair Labor Standards Act (FLSA), a law originally passed in 1938 during the Roosevelt administration, requires employers to pay certain employees time-and-a-half for overtime work. The FLSA exempts certain employees from overtime requirements so that employers do not have to pay these exempt employees time-and-a-half for overtime.

One set of exemptions in FLSA are called the “white collar” exemptions which exempt certain salaried workers from overtime pay requirements. One rationale for exempting these workers was that they earned so much money that there was no need pay them overtime on top of their salaries. However, the salary threshold used to determine who can be classified as exempt have not been updated in decades.  Consequently, many exempt salaried workers often make less per hour than the hourly workers that they supervise. A so-called “white collar” worker can be exempt from overtime pay even if she earns as little as $23,660 per year, which is below the poverty line for a family of four. The DOL told the story of one of these workers when it announced the proposed updates to the regulations. This worker, a manager at a discount retail store, worked an average of 72 hours per week without any overtime pay and earned less than some of the hourly workers that he supervised.

The proposed rule changes would increase the $23,660 threshold to $50,440 per year. The new rule would also ensure that the threshold continues to rise so that it keeps pace with inflation or wage growth.

“FDR said of the FLSA: ‘Except perhaps for the Social Security Act, it is the most far-reaching, far-sighted program for the benefit of workers ever adopted here or in any other country,’” said Labor Secretary Tom Perez. “To maintain the reach and far-sightedness that FDR promised, our proposal would restore overtime pay to millions of salaried workers whom the law was intended to protect. Today, we are taking an important step forward toward empowering the middle class and rewarding hard work with a fair wage.”