The New Overtime Rule Will Directly Benefit 12.5 Million Working People
These tables give a detailed breakdown of EPI’s estimate that 12.5 million salaried workers will directly benefit from the Department of Labor’s new rule raising the salary threshold below which salaried workers are automatically eligible for overtime pay. According to our assessment, most of these 12.5 million workers will be newly eligible for overtime protections: they are currently ineligible for overtime pay because they are classified, or wrongly classified, as having job duties that preclude receiving overtime. The rest will have their rights strengthened (they are currently at risk of being classified or misclassified as ineligible for overtime). There is inherent uncertainty in these estimates because no data are available documenting who is currently eligible for or receiving overtime.
In other words, workers making at or above the old threshold could have been excluded from overtime protection if their jobs were determined to be executive, administrative, or professional (EAP) jobs. The new rule raises the threshold from $455 per week to $913 per week (in 2015 dollars). There are 12.5 million salaried workers making at least $455 but less than $913 per week, and under the Fair Labor Standards Act (FLSA), those workers could have been excluded from automatic overtime protection if they were classified, or incorrectly classified, as EAP employees.
FLSA overtime rules were established to make sure that no one but higher-level workers with control over their time or tasks works overtime without getting paid for it. Unfortunately, rule changes in 2004 regarding the “duties tests” used to determine who does relatively high-level work made it a lot easier to deprive many lower-level workers of overtime protection by tweaking their job descriptions. Employer willingness to push the limits of the law have resulted in widespread noncompliance and misclassification. Raising the threshold will return overtime protection to the employees who need it by preempting these malleable duties tests for the workers under the new threshold.
These tables describe the demographic, geographic, industry, and occupational composition of the workers who will directly benefit from the higher salary threshold. An EPI technnical paper, Estimating the Number of Workers Directly Benefiting from the Proposed Increase in the Overtime Salary Threshold, provides the detailed computational methodology for estimating the number of workers affected by raising the overtime threshold.
As the tables show, raising the overtime salary threshold will directly benefit a broad range of working people, including:
- 6.4 million women, or 50.9 percent of all directly benefiting workers
- 4.2 million parents and 7.3 million children (under age 18)
- 1.5 million blacks (who make up 8.9 percent of the salaried workforce but 12.0 percent of directly benefiting workers), and 2.0 million Hispanics (who make up 11.8 percent of the salaried workforce but 16.0 percent of directly benefiting workers)
- 3.6 million workers age 25 to 34 (who make up 22.9 percent of the salaried workforce but 28.7 percent of directly benefiting workers)
- 4.5 million millennials, defined as workers age 16 to 34 (who make up 28.2 percent of the salaried workforce but 36.3 percent of directly benefiting workers)
- 3.2 million workers with a high school degree but not more education (who make up 15.5 percent of the salaried workforce but 25.3 percent of directly benefiting workers)
Raising the threshold will affect workers in all states, with the biggest effects—in terms of states with the greatest share of salaried workers in that state who will directly benefit from raising the threshold—in West Virginia (30.7 percent), Arkansas (30.6 percent), South Carolina (30.3 percent), Florida (29.3 percent), Tennessee (29.2 percent), Idaho (29.1 percent), Georgia (28.2 percent), South Dakota (28.2 percent), Delaware (27.7 percent), and North Dakota (27.5 percent).
Of the major industries, the new threshold will have the biggest impacts—in terms of the greatest share of salaried workers in the industry who will directly benefit from the increase in the overtime threshold—in agriculture, forestry, fishing, and hunting (39.7 percent); leisure and hospitality (37.3 percent); other services (33.2 percent); construction (32.6 percent); and public administration (32.5 percent).
Occupations with the greatest share of salaried workers in the occupation who will directly benefit will be office and administrative support occupations (46.0 percent); transportation and material moving occupations (40.4 percent); farming, fishing, and forestry occupations (40.2 percent); construction and extraction occupations (38.9 percent); and service occupations (38.0 percent).