'Literally taking money from the pockets of workers': Trump Labor Department slammed for 'wholly inadequate' overtime pay rule
Labor rights advocates and progressive economists slammed the Trump administration after the Department of Labor announced Tuesday a final rule on overtime pay to replace a bolder Obama-era proposal blocked by a federal court in Texas.
"While the administration may be trumpeting this rule as a good thing for workers, that is a ruse," said Heidi Shierholz, director of policy at the Economic Policy Institute (EPI). "In reality, the rule leaves behind millions of workers who would have received overtime protections under the much stronger rule, published in 2016, that Trump administration abandoned."
The Labor Department outlined in a statement Tuesday four key results of its final rule, which is set to take effect on Jan. 1, 2020:
- raising the "standard salary level" from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
- raising the total annual compensation level for "highly compensated employees (HCE)" from the currently-enforced level of $100,000 to $107,432 per year;
- allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
- revising the special salary levels for workers in U.S. territories and in the motion picture industry.
The current standard salary threshold of $23,660 hasn't been updated since 2004. The Labor Department projected Tuesday that about 1.2 million more workers "will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level" and another 101,800 workers "will be entitled to overtime pay as a result of the increase to the HCE compensation level."
The federal government sets the minimum salary level but, as CNBC noted Tuesday, "several states including California and New York have salary thresholds for determining overtime eligibility that are higher than the federal standard."
However, EPI's Shierholz pointed out that millions more workers would have benefited from the blocked Obama-era rule, which would have raised the salary level to $47,476 and updated it every three years to account for increases in costs of living. Based on her analysis of the Trump administration's overtime pay proposal from March—which had a slightly lower salary threshold of $35,308 per year—Shierholz explained:
I estimate that roughly 8.2 million workers who would have benefited from the 2016 rule will be left behind by the Trump administration's rule. This 8.2 million is made up of 3.2 million workers who would have gotten new overtime protections under the 2016 rule and won't get them under the Trump rule, and 5.0 million who would have gotten strengthened overtime protections under the 2016 rule and won't get them under the Trump rule.
Additionally, unlike the 2016 rule, the Trump administration's version does not automatically update, meaning workers' annual losses will grow over time.