OT work deserves OT pay

By Janice Fine

You put in overtime hours but don't get overtime pay.

Sound familiar?

For millions of Americans, unpaid overtime is a big problem. But it wasn't always like this - and it doesn't have to be this way. Here's the story:

In 1938, Congress passed the Fair Labor Standards Act, which abolished child labor, established a minimum wage, and gave the Department of Labor enforcement powers to protect American workers from being exploited at work.

The Labor Department protected American workers by making sure that if they worked more than 40 hours, they would get paid time and a half. To make sure the rule applied only to workers who lacked the bargaining power to set their own time and tasks, certain qualifiers were put in place. One of these was a threshold salary below which workers were required to receive overtime pay.

Today all hourly workers plus salaried workers who make less than $23,660 a year are required to get time and a half for overtime. But the poverty level for a family of four in the United States is $24,250. That means that as Secretary of Labor Thomas Perez put it, "Under the current rules, even if you're poor, you may not qualify for overtime. That doesn't make sense."

Under the current system, if you are a low-income, salaried worker, you could work 50, 60, or 70 hours a week - or more - and it is basically up to your employer whether or not to compensate you for that additional work.

Salaried workers who make more than $23,660 can be exempted from the right to overtime pay if they are classified as professionals, administrators, or executives. The haziness of these exemptions means employers can and do use them to avoid paying overtime.

But are low-level supervisors really executives who should be exempt from protection? Today, many restaurant workers, social workers, loan officers, computer technicians, office administrators, customer service reps, retail sales workers, and insurance clerks and agents are subject to the so-called "white-collar exemption."

The notion that workers who make less than $30,000 do not deserve protections is hopelessly outdated - indeed, you could argue that workers don't achieve real bargaining power of their own until they are making $50,000 or more.

If the Department of Labor updated its regulations to ensure that everyone who makes $50,000 or less had the right to overtime, more than six million workers would benefit, according to the Economic Policy Institute.

In March of last year, President Obama sent a memo on the issue to the Labor Department, urging the agency to "update existing protections consistent with the intent of the act."

Unfortunately, you can't take a memo to the bank.

The Department of Labor spent the last year seeking public comment on the issue and has yet to take action. If the president's goal is to help as many people as possible, the only true solution is to up the cap to at least $50,000. A half measure won't do.

Some national business groups have argued that paying workers more could hurt business and might even cause employers to cut pay or use fewer workers. But this is false.

If employers want to avoid paying overtime, they could choose to do more hiring, shrinking the unemployment rate. Or they could simply pay time and a half to their current workforce, putting more take-home pay in their pockets. And since consumer spending represents more than half of all economic activity, a boost in either employment or take home pay would likely result in more spending and more economic growth.

By almost every measure, corporate profits and productivity have soared over the last few decades. Middle-class and low-income families have not shared in this prosperity. They are working overtime to make ends meet - and deserve to be paid better.