By Ross Eisenbrey, Economic Policy Institute
The decision of a judge in Texas to block the Department of Labor’s new regulations guaranteeing overtime pay to millions of workers is a legal travesty, so poorly reasoned that it invites questions about the judge’s motivation. The decision is more than just bad law, however, it is also a financial blow to people who had every reason to expect that their lives were about to be made a little easier.
The new rules, which were set to take effect today, on December 1, would have required employers to pay time and a half the regular rate of pay for each hour worked beyond 40 in a week to any employee paid less than $47,476 a year. Prior to the Obama rule, employees earning as little as $23,660 could be called “executive” or “administrative” and denied overtime pay even if they spent the majority of their workweek scrubbing floors or stocking shelves. There are 12.5 million salaried workers earning between $23,660 and $47,476, and every one of them would be entitled to overtime pay under the new rule.
People all across America who have been working 5, 10, or even 20 hours of overtime a week without any extra compensation had been told by their employers that that their long hours were about to end, thanks to the Department of Labor’s new overtime rules. Or they were told that they were going to be paid extra for their extra hours of work, or that, at least, they were going to get salary increases to make those kinds of long hours more financially rewarding. Now, many employers have put those plans on hold. At EPI we’ve heard from a number of the affected workers.
Drew, the artistic director at a New York City theatre, was expecting to get paid for his overtime for the first time:
I’m a salaried employee at a theater, where working long hours to put up shows is a part of the culture. My company spent time figuring out who would get raises and who wouldn’t be exempted, and prepared everyone to get trained on new hour tracking software. Nobody is sure how—or if—things are going to move forward now.
There are times when I work 12 hour days before a show opens, or come in on weekends to talk with patrons and moderate post-show discussions. While I don’t mind working overtime, I was looking forward to the extra pay I would get. Just as importantly, I think the overtime rule was going to end up being a great culture change. People who work in a theater are pretty passionate and don’t mind working long hours—but this would have forced everyone to develop more work-life balance.
Gordon, a web communications specialist at an Arizona university, was anticipating thousands of dollars of additional pay, and his employer was making preparations to pay it:
I make $44,000 a year, so I would have fallen under the new salary threshold and received overtime. I was supposed to start reporting my hours this week (I generally work 45-50 hours), but my HR department has told me to hold off on that change. My workplace is one of many that already implemented transitions to the new overtime procedures, and everyone has been caught off guard.
I’m actually more upset by the resistance to common sense public policy than the hit on my take home pay. It used to be that half of salaried workers were eligible for overtime, now it’s less than 10 percent. That’s as stark a statement as one can make about the decline of the middle class. We didn’t stop working hard or working long, we just stopped getting valued for our contributions.
Young people are disproportionately affected by the overtime exemption and would have benefited disproportionately from the new rules. Sarah, a university publicist, is financially strapped:
I was moved from salary to hourly to accommodate the change in the overtime rules, and would have gotten paid overtime if I worked more than 40 hours a week.
As a millennial, most of my friends fall in this category—but most of my family does, too. Everyone I know is drowning in student loan debt. I work two jobs just to survive. If lawmakers at every level want to “make America great again,” maybe they should start with regulations that protect working people. Rich Senators gloating about their so-called victory on Twitter is an insult to those of us who actually work 60-70 hour weeks.
Rep. Rosa DeLauro (D-CT) told the story of Aubrie, a gas station manager, who was on the verge of getting paid for his overtime and wants Congress to make it happen:
My day was ruined when I found out they blocked the new overtime law. I’m a salaried manager at a gas station. I’m required to work 45 hours a week, but it usually ends up being more because I pick up shifts for people and fill in when employees call out. My company switched me to hourly, so I would get overtime for those extra hours. Without the new rule, they’re switching me back—just when I was on the cusp of finally getting paid for every hour I work. I don’t understand why lawmakers don’t want people to get paid for their work.
Julia, a museum employee in Iowa City, understands that politicians have a choice about whose side they’re going to take:
I work in the museum industry. Museums are often underfunded and therefore have small staffs, who often have to work well over 40 hours a week on a regular basis. I don’t mind working hard, but the new regulations were going to make sure that I would no longer have to work overtime without being properly compensated for it. Now that seems likely to no longer be the case.
I feel like I’m relatively lucky—I have a good job and my boss tries to keep my schedule reasonable. But there are so many people out there who are struggling to make ends meet, and this rule would have meant extra money when they work long hours. It’s such a shame to see that Senators in Washington would rather see businesses have a little extra profit than put money in the hands of working people.
It’s important to note that the new overtime rule has already benefitted thousands of workers, putting badly needed money into their pockets. Not every employer has frozen its plans to reduce hours or pay more. Some major employers, including Walmart and the holding company that owns TJ Maxx and Marshall’s, have already given managers salary increases to put them over the minimum for exemption, and they aren’t rescinding those raises.
The Texas court’s decision has discouraged millions of other employers from following suit, but the judge’s ruling may be short-lived. Today, the Department of Justice filed an appeal in the case, and it is hard to imagine that even the very conservative 5th Circuit U.S. Court of Appeals won’t reverse the lower court’s decision. The Department of Labor’s attempt to deliver a better work-life balance and fairer pay to millions of workers may yet succeed.