The Obama administration’s new overtime rule could mean extra bucks for those extra hours at work – but only if your boss follows the rules. And historically, that doesn’t always happen.
“There’s a huge problem with compliance,” said D. Michael Hancock, former assistant administrator for the U.S. Department of Labor’s Wage and Hour Division. “It’s sort of the folk legend that, ‘I’m paid a salary, therefore I don’t get paid overtime.’ There’s a lot of ignorance out there among employers and employees.”
So listen up: Under the new regulations, salaried employees who make under $47,476 a year are entitled to be paid time and a half for anything over 40 hours a week. Until now, that threshold was $23,660 a year. If you’re an hourly worker, you already qualify for overtime. And if you make more than $47,476, you still might qualify, but it depends on your job duties.
The White House estimates this will benefit 4.2 million workers. They’ll either get a raise, so they’re above the $47,476 threshold; get paid overtime for extra work; or get their hours cut back. The Huffington Post’s Dave Jamieson explains further, calling it a “BFD.”
This should especially affect low-paid restaurant and store managers, said Hancock, now an attorney at Cohen Milstein Sellers & Toll in Washington.
“It’s not at all uncommon for them to earn a very low salary, $28,000 to $30,000 a year, and be expected to work fairly grueling hours,” he said. “People are just being worked to the bone, and either they’ll be paid more and continue to do that, or the employer is going to reduce their hours and those people will have more time to themselves.”
There are a couple of hitches, though. A Republican senator vowed to introduce legislation to block the rule from going into effect, saying it will raise college tuition costs. The National Retail Federation called it a “career and morale killer,” saying businesses will respond by turning salaried employees into hourly ones.
Then there’s the problem for workers classified as “independent contractors.” They don’t qualify for overtime at all (or minimum wage and other benefits, for that matter). And that’s a huge issue of contention in the new economy, as on-demand companies such as Uber fight to avoid calling their workers “employees.”
And there’s the question of compliance. Breaking overtime rules already is the most common wage and hour violation, Hancock said. The Labor Department had more than 10,000 cases with overtime violations in fiscal year 2015, totaling $137.7 million in back wages.
There are whole industries with a “a culture of not paying overtime,” Hancock said, from restaurants to meat processing plants and creative arts fields like filmmaking.
And, Hancock tells me, “you often see it in your industry.” That’s right, bosses: He’s talking about journalism.