The Fair Labor Standards Act of 1938 struck a bargain.
After establishing for the first time a 40-hour workweek, the landmark law – proposed under Labor Secretary Frances Perkins – said that businesses could call for employees to work longer than that, but only as long as they are compensated fairly.
For managers and executives – employees with significant responsibility for oversight of the business – that meant a high enough salary to compensate for the extra hours and obligations.
For the rest of the workers, it meant time-and-a-half pay whenever the workweek dragged on too long, both as a reward to the employee for staying late, and as a deterrent to keep employers from regularly exploiting low-level staff.
For a while now, that bargain has been broken.
Employers are now allowed to pay salaried workers as little as $24,000 a year and, as long as they are given the flimsiest of managerial titles, exempt them from overtime pay. (In Maine, the threshold is $33,000.)
Businesses have caught on, throwing a small salary and a clip-on tie at workers, then forcing them to put in 50- and 60-hour weeks as “managers” without any additional compensation.
It has happened throughout the economy. According to the National Employment Law Project, just 7 percent of salaried workers now qualify for overtime, down from 65 percent in 1975 – that’s millions of low-income employees being treated as middle-managers for the sole purpose of denying them overtime pay.
The Obama administration took action in 2016, doubling the threshold to exempt salaried employees from overtime rules to about $47,000 a year. However, business groups and 21 states sued, and in 2017 a federal judge struck down the administration’s rule.
Once in office, the Trump administration set out to craft its own rules, and last week the U.S. Department of Labor issued a proposal to raise the salary threshold to $35,308 a year.
The proposed rule would affect about 1 million workers, about 3 million fewer than under the Obama-era rules. It’s an improvement over the status quo – the threshold was last increased in 2004 – but would still codify a lot of injustice.
Fortunately, change could come in Maine. L.D. 402, from state Rep. Ryan Tipping, D-Orono, would raise the threshold each year beginning in October until it reaches roughly $55,000 by 2022, then index it to inflation.
The change would affect an estimated 28,000 Maine workers. Though half of those workers already qualify for overtime because they do not perform managerial duties, they don’t receive overtime pay because of unscrupulous employers and lax oversight. Raising the threshold would eliminate that problem altogether.
At a hearing on the bill Monday, business groups said the proposed increase is too dramatic. A spokeswoman for the University of Maine System said it would cost the system an additional $7.3 million a year by 2022.
The right threshold and the speed of implementation are up for debate.
But the right threshold isn’t $35,308 a year. It’s certainly not $24,000. And the right rate of change isn’t every 15 years, either.
The threshold needs to genuinely reflect fair pay for managers. It must be adequately enforced, and it must be indexed to inflation, so we’re not in the same spot a decade from now. It should be nationwide.
People deserve to make a living wage through a 40-hour workweek, and they deserve to be fairly compensated for their time and effort.
That was the bargain struck 81 years ago, and it should be upheld today.
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