Melinda Robinson was excited to become a manager at a Kansas City fast food restaurant. But after months of working 55 to 75 hours a week with no overtime pay, she quit.
“I jumped at the chance to make more money as a manager, but in reality, I struggled harder,” the 38-year-old woman said. “My set salary was supposed to be for 45 to 55 hours a week, but my store was always short-staffed and I was sometimes there from open to close.”
Relief is expected to be coming for managers who work long hours, as Robinson did. The Obama administration is proposing changes to federal wage and hour laws that would make more workers eligible for overtime pay.
Revisions of the Fair Labor Standards Act — the first major overhaul in a decade — have been submitted by the Labor Department to the White House for review. Updating was requested by the president in March 2014, and no congressional approval is required. But even after the proposals are revealed, there will be months of public comment and review before the amendments become law.
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Widely predicted, the revisions are expected to deal particularly with relatively low-paid managers. Now, employees who make $23,660 a year or more don’t have to be paid overtime if they’re classified as “exempt” salaried or managerial workers. The $23,660 level, set in 2004, didn’t have an inflation adjustment built into the law.
Amendments are likely to raise the income threshold to between $42,000 and $52,000, making workers paid less than that overtime-eligible, no matter their job titles. Policy experts say that could raise the take-home pay of 3.5 million to 6.1 million workers.
The Economic Policy Institute and the National Employment Law Project want the changes as a way to dramatically increase overtime eligibility. The top end of the revisions might make 47 percent of American workers eligible for time-and-a-half pay if they work more than 40 hours a week, regardless of their salaried position or managerial title. Currently, only about 12 percent of salaried workers are overtime eligible.
The restaurant industry is against the expected changes. Earlier this month, a White Castle officer testified before a U.S. House subcomittee on behalf of the National Council of Chain Restaurants. He said the overtime revisions could cost restaurant and retail businesses more than $5 billion a year.
They “would impose immense costs on chain restuarants and would stifle opportunities for career advancement for hourly employees who wish to manage our restaurants,” said White Castle vice president Jamie Richardson.
And the U.S. Chamber of Commerce says one overtime pay threshold won’t work for the whole country. It wants regional pay scales to determine overtime eligibility.
In addition to raising the overtime salary threshold, the new rules are expected to change some professional or occupational classifications that now exempt workers from overtime pay. That could include certain employees classified as outside salespeople and computer professionals as well as other executive, administration and professional workers.
The wage-and-hour revisions are being proposed at a time when other employee pay issues also are on the front burner. A few Democratic presidential candidates have made better pay for workers a campaign issue, while some Republican candidates have rejected the need for change.
Around the country, many states and municipalities have ordered increases in their minimum wages above the current federal $7.25 an hour, which hasn’t changed since 2009. President Barack Obama has called for ratcheting the minimum up to $10.10 an hour but hasn’t convinced Congress.
Also around the country, labor unions and social justice organizations are backing wage protests by fast-food and other low-paid workers, calling for unionization and pay of $15 an hour.
Meanwhile, employers are fighting in the courts against a different administrative law change that made it easier for labor unions to hold quicker union elections in workplaces.
At the same time, many employers who might be affected by the overtime overhaul and minimum wage increases are dealing with coverage mandates under the Affordable Care Act. The insurance law requires covered employers to offer health insurance participation to employees who generally work 30 hours a week, so many companies have limited employee hours to avoid that expense.
Authorities note that wage-and-hour reclassification of some employees may seem like a pay bump if they begin to get time-and-a-half pay, but it could backfire in terms of their overall pay packages.
Some employers, for example, offer certain benefits only to exempt employees, and workers who are reclassified as hourly to get overtime might no longer get benefits such as merit bonuses or even paid vacations.
After the regulatory changes are revealed, there will be a comment period to let industry groups and the public respond. Even without the need for congressional approval, quick overhauls are unlikely. It took 17 months before the 2004 overtime amendments went into effect after those proposals were made public.