A fast food manager in West Mifflin mopping up floors after closing; a social worker in Carrick counseling a client on her drive home — these workers along with millions of other salaried employees across the U.S. will soon be able to get paid for work exceeding 40 hours in a week thanks to a new rule from the U.S. Department of Labor.
The final rule allows those who earn salaries up to $58,656 to collect overtime pay for their work. The previous rule, enacted during the Trump administration, set the threshold for being exempt from overtime at $35,568. The bump will help an estimated 4 million workers across the U.S. including a disproportionate number of women and workers of color, according to an analysis by the Economic Policy Institute, a Washington think tank focused on labor issues.
“This is a significant shift for workers in Pittsburgh,” said Jeimy Ibarra, chapter director at Pittsburgh United, an advocacy group for working class families. “These are majority women or people of color working in health care, social services that will mostly be impacted by the shift.”
Hourly workers are already eligible to earn overtime, but these salaried employees — in administrative, managerial or professional positions — aren’t able to get paid for any extra hours they work. The income threshold set by the Department of Labor once covered 63% of workers in 1975, but just 9% in 2023, according to the Department of Labor’s analysis.
“The right to overtime pay has been eroded over time,” said Samantha Sanders, director of government affairs and advocacy at Economic Policy Institute. “A lot of folks, especially who are salaried and in white collar jobs, have not been familiar with their rights under this [rule].”
The regulation impacts workers and managers who fall under what’s known as the “white collar exemption,” or those who earn low wages but in salaried occupations. These include restaurant and retail managers, social service counselors, university administrators and nonprofit professionals who work more than 40 hours a week, but are exempt from overtime pay.
“It really will change a lot of people's lives,” said Mike Healey, a Pittsburgh labor attorney. “You have a lot of managers who have, quote unquote — ‘manager discretion’ who aren't making that much money,” Healey said.
The median earnings in the City of Pittsburgh, which include the wages, salary and income from employment, is $60,084, according to the most recent estimates from the U.S. Census Bureau’s American Community Survey. Women in Pittsburgh earned a median salary of just $52,758.
“If we want people to stay in Pittsburgh and raise families here, we really need to make sure that they have an income that allows for that,” Ibarra said.
Trade group opposition
While the new rule is a boon for workers, it could be a headache for some organizations. They may have to update their payment systems to track overtime and make space in their budgets to pay their workers.
Many national trade groups have come out against the regulation. The U.S. Chamber of Commerce claimed it "will harm small businesses and charitable nonprofits." The National Restaurant Association warned it will “exponentially increase operating costs for small business restaurant owners who are trying desperately to maintain menu prices for their customers.” And “students will be harmed if institutions are forced to cut services, reduce financial aid, reduce staffing, and raise tuition to address the rapid growth in costs this rule would produce,” according to the American Council on Education, a national higher education trade group.
Enforcement of the rule will fall on the Wage and Hour Division of the U.S. Department of Labor, which is responsible for enforcing all the provisions of the Fair Labor Standards Act. Should employers fail to pay an eligible employee overtime, workers without a union contract, for example, could have a tough time collecting what they’re owed.
“The Wage and Hour Division works very hard but is severely understaffed,” Sanders said. “A lot of the compliance with the law is going to depend on workers being aware of this change and are able to bring it up to their employers.”
Previous attempts to enact rules to raise the income eligibility for overtime have been quashed in court. Back in 2016, a federal judge in Texas struck down the Obama administration's attempt to lift the threshold to $47,476 — a week before it was scheduled to take effect.
This rule could meet the same fate. “I'm willing to be pleasantly surprised that no one filed a lawsuit,” Healey said. “But given the politics of this country, I think there's going to be a lawsuit.”
In the meantime, Healey said workers who might be affected should hold onto their pay stubs. “The main advice is: keep good records,” he said.
The threshold’s first raise will go into effect on July 1 for those making less than $43,888. And by Jan. 1, 2025, it will include workers with salaries up to $58,656. This time, the rule is scheduled to keep up with worker’s pay over time. According to the Department of Labor, the minimum salary threshold is set to be updated every three years based on future wages.
