The Trump administration has issued its version of an Obama-era rule to extend overtime pay, one that leaves out millions of working people.
"The wait is over, but this isn’t what we were waiting for,” said International President Lonnie R. Stephenson. “This is a rule that leaves too many working people undervalued and underpaid.”
The Labor Department set the salary threshold – the top amount a full-time, salaried employee can make to qualify for overtime pay – at $35,308 a year, an increase from the current $23,660 but also a stark drop from the $47,476 proposed by the Obama administration.
The new version, initially announced March 7, does not include automatic updates to keep up with inflation like its predecessor did. Instead, according to the Washington Post, increases will be determined every four years via the rule-making process, making it more palatable to business owners.
As the Economic Policy Institute notes, the 2016 rule was not overly expansive. In 1965, more than 60 percent of salaried employees qualified for the extra pay. By 2016, that number had dropped to just seven percent. The Obama Labor Department rule would have only partially restored that coverage, to roughly 33 percent.
EPI calculated that well over half of the working people who would have gotten new or strengthened overtime protection will now be left behind. The Labor Department itself estimates that about 4.2 million people would have been affected by the Obama version, compared with only 1.1 million who will be covered by the Trump proposal.
“That means this administration is effectively turning its back on millions of workers,” said EPI Senior Economist Heidi Shierholz. “Trump and his cabinet are again siding with corporate interests over those of working people.”
The Trump version also doesn’t address the “duties test” which determines whether an hourly worker is performing supervisory tasks and thus ineligible for the time-and-a-half pay.
“Without any updates to the duties test, this is a really flawed rule,” Shierholz told Bloomberg Law. “I think there’s no way that this will not face legal challenge.”
The 2016 rule was held up in court from challenges by Republican-led states and business groups, despite the Labor Department meeting with more than 200 organizations on all sides of the issue and reviewing more than a quarter million public comments.
In Maine, the Legislature is considering a measure to raise the overtime threshold from its current cap of $33,000. As Maine Public Radio reported, Democratic Rep. Ryan Tipping is sponsoring a union-backed bill to increase the rate every year until it reaches $55,000 by 2022, with future increases pegged to inflation.
“Year after year we are watching people who own large companies get wealthier, while their employees see a comparatively smaller and smaller return on their hard work,” Tipping said.