Q: I’m hearing in the news that the White House is pushing for “overtime expansion” and I’m confused about what that means. Is overtime going to be paid at more than the current one-and-a-half times regular pay?
That’s a logical guess after hearing “overtime expansion”, but no.
The “expansion” doesn’t refer to the overtime itself. It refers to the expansion in the number of people who will be eligible to receive overtime.
The best way to illustrate who these people might be, is with a story.
Meet Joe. His job as a ‘manager’ at a convenience store requires him to put in an average of 65 hours a week. Because he is paid a salary of $23,660 (the minimum threshold or “magic number”) he’s considered exempt from overtime and therefore receives nothing extra for those 25 hours in excess of 40 that he works each week. In fact, when Joe adds up the grand total of hours he works per year, he actually makes less than minimum wage. This is currently perfectly legal. And the fast food, retail and convenience store industries are infamous for this practice.
What the White House is proposing is an increase in the minimum threshold from $23,660 to – hang on to your hat- $50,440!
Why so much? Where did they get that number?
The current minimum salary threshold has only been adjusted twice in the last 40 years. That’s right.
First in 1975 ($13,000) then in 2004 ($23,660). If you were to adjust the 1975 magic number to today’s dollars it would be about $52,000. That’s the rationale for the new eye-popping proposed number, is to come close to a 1975-equivalent.
So what does that have to do with Joe? Why might he be eligible for overtime all of a sudden? Because the White House assumes (correctly IMO) that Joe’s employer is not going to increase his pay to $50,440 just so that he can continue working 65 hrs a week at the convenience store. What they’ll do instead is make him an hourly employee and pay him overtime if he works over 40. And that’s how Joe becomes one of the “expanded” number of people who’ll be eligible for overtime.
Eva Del Rio is a human resources consultant, columnist and creator of the HR Box – tools for small businesses and startups. Send questions to Eva@evadelrio.com
