Late last year, Katie Donley got out of work early enough to do something she never thought possible: She picked up her 15-year-old son from school at the end of the day.
The 37-year-old restaurant manager from Ohio had the Obama White House to thank for the family time. Before he left office, the former president rewrote federal overtime regulations to ensure salaried workers like Donley were eligible for extra pay when they work long weeks. Donley’s employer decided to tighten up her schedule to avoid paying her time-and-a-half when she logs more than 40 hours.
“I was never able to pick up my kids from school before,” explained Donley, who typically works between 50 and 60 hours a week for a salary in the mid-$30,000s. “It made a big difference to me. I don’t know how to describe it.”
But then Donald Trump won the presidential election, and a federal judge issued a temporary injunction blocking Obama’s reforms from taking effect. With the overtime changes suddenly in limbo, Donley’s hours creeped back up to 10 a day.
Donley is one of millions of Americans whose pay or workload may have changed for good due to the overtime rules. But the reforms are now tied up in court and face a dim future under Trump, whose administration is rapidly peeling back regulations on corporations. The new, business-friendly White House could decline to defend the reforms on appeal ― making it more likely they will die a slow death ― or choose to replace them with something more palatable for employers and less generous to workers.
If the reforms don’t survive in some fashion, a status quo will prevail in which hardly any Americans who work on salary qualify for overtime pay. It wasn’t always so. In 1975, an estimated 62 percent of salaried workers were covered by overtime law. But that figure has fallen to around 8 percent, as employers take advantage of regulations that haven’t been updated over time. As a result, overtime pay has become a foreign concept to an entire generation of salaried workers.
Under the Fair Labor Standards Act, hourly workers are entitled to time-and-a-half pay for any hours beyond 40 in a week, but the picture is more complicated for employees on salary. Whether or not they get overtime depends on how much they earn and what their job duties are. When workers are exempted from the law, companies can force them to work 60, 70, or even 80 hours a week without paying anything extra for it.
“If employers don’t have to pay for people’s time, then they can [use] it without giving a thought to it, and they do,” said Ross Eisenbrey, vice president of the Economic Policy Institute think tank, who consulted the Obama White House on crafting the reforms. “They’re very profligate with employees’ free time.”
“I was never able to pick up my kids from school before. It made a big difference to me.”
- Katie Donley
The Obama administration tried to make the rules more favorable to workers by raising the so-called salary threshold ― the salary under which everyone is entitled to overtime pay, including managers, regardless of their job responsibilities. The current threshold, set by President George W. Bush, is just $23,660. Obama’s rule would have doubled it, to $47,476. By White House estimates, the changes would extend overtime protections to an additional 4 million workers, restoring the share of overtime-covered workers closer to its historical norms.
The changes would leave affected employers with some hard choices to make: Either raise workers’ salaries above the threshold, start limiting their schedules to 40 hours a week, or be ready to pay extra when they work extra. That dilemma helps explain the vigorous opposition to the reforms from business groups, particularly in food and retail, as well as the nonprofit world, where long hours and relatively low pay are common. Some employers would face labor costs they haven’t dealt with in decades.
Workers like David Dorman, a program manager at a nonprofit in Texas, were counting on either bigger paychecks or more time with their families as a result.
“The overtime rule, I thought, would be a positive thing for Texas and for America,” said Dorman, who earns $40,000 per year and often logs more than 40 hours in a week. He believes the reforms were long overdue. “You think of the service sector, with quote-unquote managers making $30,000 a year and [working] 70 or 80 hours. It’s a travesty.”
For some employers, the looming implementation of the rules may have finally forced them to consider the fairness of their workers’ pay relative to their long schedules.
Lisa Goff was one of the salaried workers between the old and new thresholds. She’s the director of a child abuse nonprofit in Montana. She loves her job, though it often requires long weeks. At a salary of $38,000, she expected the new overtime rules would get her either a significant raise or a shorter work week, giving her more time with her husband. She assumed both possibilities died after the election.
Goff was stunned when her nonprofit approved a raise above the threshold anyway, despite the legal uncertainties of the reforms.
“Because I made so little, I haven’t been able to put anything into retirement. Now I can do that,” said Goff, who’s 61. “That’s why it makes a difference to people ― whether you’re supporting a young family like I’ve done, or you’re at my age now, where I need to be able to live [without a salary] in a couple of years.”
Goff’s story may be an outlier, but there are likely thousands of workers who’ve received raises because of Obama’s attempt at overtime reform. Some employers announced raises when the rules seemed like a done deal, and then may have felt they couldn’t rescind them.
In October, before the rule had been blocked and Trump’s candidacy appeared anything but a long shot, Walmart announced that it would be hiking the pay floor for its salaried store managers, from $45,000 to $48,500, a clear reaction to the reforms. After the rule ran into legal troubles, a Walmart spokesman said the raises were slated go through regardless. Retailer TJX, parent company to Marshalls and T.J. Maxx, announced that it would honor the embattled rule as well, meaning salaried managers would either get raises or start receiving overtime pay.
“If employers don’t have to pay for people’s time, then they can [use] it without giving a thought to it, and they do.”
- Ross Eisenbrey
Of course, not all employers reacted to the reforms in such a magnanimous way. Kevin Hutchinson, who lives in Lancaster, Pennsylvania, said the cellular store where he worked responded by moving salaried employees to hourly rates, then capping them at 40 per week, resulting in lower overall pay. Hutchinson said he had been earning around $45,000 per year on salary after incentives, often working nights and weekends. After the switch, he was making around $38,000, but still doing doing off-the-clock work, he said.
He left the job in late January.
“I was curious to see what my company would do. When I saw they would skirt [the reforms] by doing that, it was unbelievable,” Hutchinson said. “Obama put that in place to help the working person, not to help the corporations.”
If the Trump administration does not defend Obama’s reforms, worker groups could end up defending them instead. If so, an appeals court could find Obama’s reform lawful, paving the way for it to be implemented. If not, states could still end up fashioning their own rules that take the place of federal ones, much like the minimum wage: California and New York already have their own regulations on overtime.
Eisenbrey said he’s hopeful overtime reforms will be implemented ― if not Obama’s, then state versions, or perhaps a “halfway version” promulgated by the Trump administration. Trump’s original choice for labor secretary, fast-food executive Andy Puzder, was a vocal opponent of Obama’s reforms. It’s unclear where Trump’s new nominee, Alexander Acosta, stands on the issue.
If Trump’s team put forward a rule with a lower salary threshold, that could placate business groups enough to prevent a legal challenge, while still bringing some workers new protections. And Trump may feel sufficient political pressure to replace Obama’s rule if he allows it to wither. After all, he promised higher wages for working-class Americans throughout his campaign.
Donley expects to be managing her restaurant regardless of what happens to the overtime rule. She’s grateful to have a job now, especially having been an unemployed autoworker during the recession. She just wishes she had either more money or more free time.
“We’ve always worked these extra hours, and you don’t get paid for it,” Donley said. “It would be nice to know you’re compensated for your time.”
In the meantime, her son has been taking the bus home from school again.
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