Under the Obama administration, the U.S. Department of Labor intended to extend mandatory overtime rights to 4 million to 5 million more workers than those who were eligible under rules dating to 2004.
The expansion would have made workers earning up to $47,476 a year eligible for mandatory overtime pay when they worked more than a 40-hour work week.
The 2004 threshold was $23,660, which meant that millions of modestly paid employees were labeled “salaried” rather than “hourly” and were denied time-and-a-half pay no matter how many hours they worked. Stories abounded of midlevel “managers” who worked 60 hours a week for no overtime pay.
The new overtime threshold was supposed to go into effect in December, but a collection of business groups, including the U.S. Chamber of Commerce, filed a lawsuit. The day before the new rules were due to become law, a judge issued a temporary injunction to block implementation.
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Now, under the Trump administration, the Labor Department has signaled it intends to start anew on the salary test part of the overtime regulations rather than defend the higher wage threshold in court.
Worker-oriented groups such as the Economic Policy Institute are trying to marshal public comment — an exercise that some deem unfair because about 300,000 public comments were sent in response to the Obama-era rule-making efforts. Why go through that again?
In reopening public comment, the Labor Department also is asking for input from employers. It wants to know the cost impact on businesses and industries. It’s seeking thoughts on whether the overtime pay threshold should be different depending on industry, company size, region of the country and other things.
Many businesses undertook compensation adjustments to prepare for the December rules before they were blocked, so the cost impact of payroll changes — whether kept in place or held in suspension — shouldn’t be discounted.
Some worker advocacy organizations also fear that the federal government will abandon the role of threshold-setter, leaving overtime pay boundaries to the private sector based more on job definitions than pay level.
And there’s another concern: How to factor for inflation. Whenever the government sets a specific dollar figure to regulate anything, such as the overtime pay threshold or the minimum wage, it quickly becomes outdated if not indexed for annual cost-of-living increases.
Furthermore, the reassessment of the overtime threshold mirrors another legislative effort to substitute compensatory time off for overtime pay.
If the overtime issue pushes your button, now is the time to weigh in. The Labor Department published its request for information July 26 and wants all comments to be in by Sept. 25.
The rules to submit comments on the overtime rule were published July 26 in the Federal Register. Information also is posted on the Labor Department’s Wage and Hour website at dol.gov/whd. Comments may be made electronically or by postal mail.