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  • Labor Department May Underestimate Workers’ Benefit From New Overtime Rules
    Posted On: May 24, 2016

    By JoAnne Powers, May 25, 2016

    The Washington-based Economic Policy Institute estimates that twelve-and-a-half million salaried workers will be gain overtime protections under new Labor Department rules.  The rule change raises the threshold under which all salaried workers are guaranteed the right to overtime pay.  The EPI estimate is three times higher than the Department’s own because it includes workers who had been exempted after being misclassified as performing executive, administrative or professional duties.  EPI Analyst Will Kimball says these duties are difficult to define:

    [Will Kimball]: “The nice thing about this salary test is that it supersedes the duties component of the overtime protections.  So basically anyone making under 913 dollars a week, is covered.  Regardless of your duties, there’s a nice clear, understandable line for everyone as far as who is covered and who is not.  For these employers to not take advantage of these sets of workers who are right on the cusp of being managerial, but also carrying out probably the same duties as the hourly employees right below them, so that they can’t just  simply throw more work on these employees without having to pay extra for it.  Really, below that salary, no one could be expected to be carrying out executive, administrative or professional duties.”

    Before last week’s rule change, the number of salaried employees covered by overtime protections had dwindled precipitously:

    [Will Kimball]: “Over the last three decades the percentage of people that are covered by that nominal threshold has just declined dramatically…since 1975, 50 to 60 percent; prior to this rule change, it was about 8 to 10 percent.  It would bring it to, according to our estimates, 32.7 percent of the salaried workforce.”

    In breaking down the demographics of those affected by the rule change, EPI notes that millennials and less-educated workers will disproportionately benefit:

    [Will Kimball]: “A lot of people on the other side will argue that these are professionals who are now going to have to lose flexibility, when it’s pretty obvious by the data that a lot of these people newly gaining this protection are lower-educated workers who probably are just being taken advantage of.  They’re probably working excessive amounts of hours.  They might have some managerial duties, but clearly its covering a huge, broad spectrum of workers.”

    The rule change means millions of workers will either have access to overtime pay, or simply gain more time: 

    [Will Kimball]: “If their employer decides ‘we’re not going to work you fifty hours, we’re going to bring you down to 40 hours’, you’re still making the same salary pay, but you have ten more hours each week to spend with your family or do other things.  If you have to reduce your salaried workers, you might have to make up for those hours with offering more hourly employees more work hours, more pay.  So, basically, it prevents employers from taking advantage of lower-salaried employees, and exploiting their time beyond what we believe is a standard work week.”

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