Overtime law needs an overhaul

Legislation could provide extra pay to 435,000 salaried workers

THE MORE WE  WORK,  the less time we have for ourselves, our families, and our communities. That’s why, in order to protect employees from being forced to work long hours, we have overtime laws. These laws, in place since the New Deal, require that most workers be paid time-and-a-half for every hour they work over 40 in a given week. It’s a straightforward bargain: when workers give up personal time for their job, that time becomes more valuable.

Unfortunately, this bargain has broken down when it comes to hundreds of thousands of salaried workers in Massachusetts. Whereas almost all hourly workers earn overtime when they work over 40 hours, salaried workers are often required to work 50 or more hours in a week, and get nothing extra from their employers for sacrificing their personal time.

As discussed in Massachusetts Budget and Policy Center’s recent report, Massachusetts has a chance to ensure that modestly paid salaried workers, like assistant managers in big-box stores and fast-food restaurants, get paid for the hours they work and have time for themselves and their families. Bills before the Legislature would modernize the state’s overtime law, extending new or stronger overtime protections to 435,000 salaried workers in Massachusetts by 2024. That’s a quarter of all salaried workers in the state.

In the meantime, President Trump’s Department of Labor has proposed its own changes to overtime standards, which would help just 6 percent of salaried workers in Massachusetts—330,000 fewer people than the Massachusetts bills. Besides protecting far fewer workers than the Massachusetts bills, the Trump administration’s proposal is also a significant rollback of improvements his predecessor put in place before leaving office.

In 2016, President Obama’s Department of Labor implemented a rule that would have extended overtime protection to hundreds of thousands more salaried workers in Massachusetts. In November of that year, however, a federal judge in Texas blocked the Obama Administration’s improvements from taking effect, in response to a lawsuit brought by several states and business groups. Instead of defending the gains made by millions of workers under the Obama Administration’s improvements, the Trump Administration did not act for over two years before issuing a proposed rule this March that would undercut those improvements.

Overtime protections are codified in a mix of federal and state laws and regulations. These standards specify a salary threshold below which salaried workers are automatically eligible for overtime. The current salary threshold, set by the federal government in 2004, is just $455 per week.

But in Massachusetts, the minimum wage is $12 per hour, or $480 over the course of 40-hour workweek. It is effectively impossible for any worker covered by our state’s wage and overtime laws to be eligible for overtime under the current salary threshold, since it’s illegal in Massachusetts to pay any such worker below $480 for a 40-hour workweek, let alone $455.

When Massachusetts created its overtime law in 1960, it set a salary threshold of $80 per week—twice the minimum wage at the time. Remarkably, Massachusetts has not updated its $80-a-week salary threshold in the 59 years since its passage.

The Massachusetts legislation would restore the state overtime law’s original standard, granting much-needed overtime protection to salaried workers earning below twice the state minimum wage. This is the same salary threshold used by a number of other states, including Alaska and California. Washington State has proposed raising the salary threshold to as high as 2.5 times the minimum wage.

Technically, even workers making over the salary threshold are eligible for overtime if they don’t perform what the overtime law calls “bona fide executive, administrative, or professional” job duties. But this standard, known as the “duties test,” is vague and confusing, which makes it easy for employers to misclassify workers as executive, administrative, or professional employees who aren’t eligible for overtime protection. Most assistant big-box and fast-food managers probably don’t know if they’re being misclassified. Even the ones who decide to challenge their misclassification have to undertake lengthy and expensive legal proceedings with uncertain outcomes.

That’s the point of setting a salary threshold: to clearly distinguish workers who have significant bargaining power over their working conditions from those who don’t. Workers earning below the threshold generally have little bargaining power, and so need overtime protection. Whereas the “duties test” is confusing and hard to enforce, establishing overtime eligibility below a specified dollar amount is transparent and easy to comply with. As the US Department of Labor puts it, the threshold “provides certainty for employers and employees, as well as efficiency for government enforcement agencies.”

Meet the Author

Jeremy Thompson

Senior policy analyst, Massachusetts Budget and Policy Center
Massachusetts legislators have an opportunity to keep the state at the frontlines of worker justice, following on our Commonwealth’s historic passage of a $15 minimum wage, earned sick time, protections for pregnant workers, gender pay equity, and paid family and medical leave. Raising the salary threshold would make it crystal clear that 435,000 modestly paid salaried workers in Massachusetts deserve overtime protection. If our state elected officials do not act, 330,000 salaried workers will be left behind when the Trump rule takes effect. (The Trump Department of Labor proposal is open for public comment through May 21, 2019. Readers can submit comments to the US Department of Labor online.)

Ultimately, raising the salary threshold is about improving work-life balance, strengthening families, and building community. In other words, it’s about time.

Jeremy Thompson is a senior policy analyst at the Massachusetts Budget and Policy Center.