MINNEAPOLIS (WCCO) — If you work long hours, your paycheck could soon be getting bigger.
On Thursday, the president is expected to issue an executive order to direct the Department of Labor to extend overtime to millions of American workers. It’s considered part of the president’s plant to lower inequality by boosting wages of lower-income workers. Business groups say it could drive up labor costs and reduce profits.
But why do some workers get overtime while others don’t?
“Under the Fair Labor Standards Act (FLSA), a lot of people don’t get overtime,” said David Larson, an employment law professor at Hamline School of Law.
Most hourly employees make overtime when they put in more than 40 hours a week, but it’s much harder for salaried workers to qualify for time-and-a-half pay.
“This legislation was enacted during the Great Depression,” Larson said. “One of the motivations was there weren’t a lot of jobs, and the idea was if we limit work to 40 hours, give a disincentive to work more than 40 hours, then they’ll hire more people.”
According to the FLSA, who gets overtime depends on the size of the company and whether or not someone is a contracted employee and if the employer is allowed to exempt them. Employers with gross sales of more than $500,000 must abide by these rules.
The major legal exemptions are for executive, administrative, professional, creative, computer and outside sales employees who make more than $455/week, or $23,600/year. Then, it’s up to the companies to decide who fits into those categories.
“When looking at the executive, do they have the ability to hire and fire people? For administrative, you ask the question, are they really in a position of responsibility,” Larson said.
Questions about exempt employees have spawned several lawsuits over the years. Obama is expected to raise the minimum salary allowed for exemption as well as change the regulations that spell out the classifications. The proposed changes are expected to increase the overtime ranks of workers fast-food restaurant managers, department store managers and computer technicians.