Overtime Pay: Everything You Need to Know
Overtime pay is the compensation employees receive for working more than 40 hours in a week. In 1938, President Franklin D. Roosevelt signed into law the FLSA.4 min read updated on February 01, 2023
Overtime pay is the compensation employees receive for working more than 40 hours in a week. In 1938, President Franklin D. Roosevelt signed into law the Fair Labor Standards Act (FLSA). This act specified under what circumstances an employee can be paid for working overtime.
The FLSA is the same legislation that set the nation's minimum wage standards and also outlined rules regarding child labor.
The Fair Labor Standards Act, as it currently stands, mandates that most employees working more than 40 hours per week are required to earn time-and-a-half compensation.
However, overtime rules don't apply to managerial positions. For example:
- Managers who supervise two or more full-time employees
- Have a say in a company's hiring and firing
- Earn salaries over $23,660 per year
cannot earn overtime.
Additionally, most states have their own overtime rules separate from those found in the FLSA.
In these instances, whichever rule pays the employee the most is the one that's enforced at the state level.
For example, in California, the state law dictates that certain employees be paid time-and-a-half not only if they work over 40 hours in a given week, but also if they work more than eight hours in a single workday.
As such, if an employee works more than 12 hours per day, he or she is entitled to double-time pay. For instance, if your standard wage is $10 per hour, you would earn this for the first 40 hours worked. After that, your pay would increase to $15 per hour as overtime.
Working Families Flexibility Act
In order to pass the Working Families Flexibility Act of 2017 (HR 118), Republicans (who hold 52 seats) will need eight Democrats to vote in favor of the bill. This House bill is sponsored by Rep. Martha Roby of Alabama. The Working Families Flexibility Act would update the Fair Labor Standards Act by amending time off for private employees.
What Does the White House Say?
As of now, advisors to the president recommend signing the HR 1180 bill into law. Even though the White House is in support of HR 1180, it's still an uphill battle for the Senate.
The Trump administration has already made it seem as though they'll stray from an Obama-era overtime rule that more than doubled overtime salary caps from $23,660 to $47,476 per year. After President Trump was sworn into office, his administration stated that the president would try to change former President Obama's overtime rule, lowering the salary threshold.
Where do Democrats and Republicans Stand?
Democrats have been against the HR 1180 bill. House progressives argue that the proposal could undermine the Fair Labor Standards Act and eliminate protections for hardworking Americans in favor of private businesses.
Six Republicans have also joined the Democrats in opposing the measure.
The main concern over the bill is that employers alone have the final say on when overtime can and cannot be used, and therefore companies can avoid paying employees for overtime work.
Democrats have called the bill a disgrace that fails to put workers first. They also argue that under the bill, employers can coerce employees to choose comp time instead of being properly compensated.
Labor Department Rethinking Obama-Era Overtime Pay Rule
The Department of Labor (DOL) came close to dismantling the Obama-era overtime regulation that has since remained in limbo. If the regulation were allowed to pass, millions of American workers would be eligible for additional pay.
President Obama's overtime regulation rule focuses on growing and strengthening the middle class by ensuring middle-class jobs pay appropriate middle-class wages. However, 21 states and company groups sued, claiming the regulation was nothing more than government overreach and would only burden the private sector.
Ultimately, a federal judge agreed and blocked the measure's implementation one week before it would have gone into effect. The rule would have been one of the biggest efforts in recent history to boost pay for workers who fall at the lower end of the income ladder.
In 2016, President Obama asked the DOL to "update and modernize" existing overtime rules. This raised the salary threshold for overtime pay to $47,476, effectively doubling the level that was already in place. Opponents have argued that paying workers more would cause undue stress on the system.
Is Paid Time Off Just as Good as Overtime Pay?
Overtime pay at one-and-a-half times a worker's normal hourly rate is not the same as paid time off. Overtime pay is more money that can be used to pay for housing, gas, food, clothing, and other needs.
If and when the Working Families Flexibility Act bill gets signed into law, employees will have to work overtime hours without knowing when, or how, they will be compensated for those extra hours.
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