When Mainers work extra hours, they deserve extra pay. The 40-hour workweek has been a pillar of the American economy for decades. It’s still what most of us envision when we think about a “full-time job.”
If the 40-hour workweek is one side of a coin, overtime protection, which provides time-and-a-half pay for hours worked beyond 40, is the critical flip side. Overtime pay buttresses the 40-hour workweek as a norm. It ensures full-time workers can expect a decent work-life balance and will be compensated when that balance is thrown off. But outdated and difficult-to-enforce overtime laws mean many Mainers are stuck with lower wages even if they’re willing or required to work long hours.
Maine’s Legislature is currently considering a bill, LD 402, that would help restore the promise of the 40-hour workweek and ensure that Mainers get the wages they deserve when they go above and beyond on the job.
Overtime protection was established in federal law by the 1938 Fair Labor Standards Act (FLSA). But the FLSA does not apply to all employees, leaving many workers without its protections.
While an exemption for some salaried workers has existed for years, the lowest paid salaried workers were always supposed to be eligible for overtime pay and in the past, many were. In 1975, 65% of salaried American workers earned less than the overtime threshold. But because the salary threshold had not been updated adequately, only 11% were in this category in 2013.[i]
Traditionally, salaried workers could be exempted from overtime protection only if they met both of two criteria. First, they must have high incomes. Second, they must work in professional, administrative, or executive roles.
In the modern workforce, it is increasingly difficult to definitively determine whether an employee is truly a “professional, administrative, or executive” worker. This makes the definition of “high-earning” especially important.
The FLSA’s income threshold for exempting salaried workers has been updated only sporadically. Today, it is woefully out of step with the needs of modern families. Under federal law, any salaried worker who earns more than $23,660 annually is considered “high-earning.” This incredibly low threshold, combined with overly broad categorization of workers as professional, administrative, or executive, means that nearly any salaried employee can be classified as exempt from overtime protection.
Importantly, Maine has taken the important step of decoupling our own salary threshold from the one set by federal law, giving us the flexibility to provide overtime pay to more workers. However, our own threshold is still so low that four out of five salaried workers in Maine still earn too much to receive overtime[ii] — despite their annual wages not approaching anything that a reasonable observer would consider “high-earning.”
LD 402 would incrementally increase the salary threshold until it reaches $55,224 in 2022, with a system for automatic adjustment thereafter. This would bring Maine closer to the number of workers covered by overtime in 1975 and would restore overtime for an estimated 28,000 low-wage salaried workers. These include social workers, nurses, restaurant workers, and others.[iii]
It’s important to know that this bill would not result in enormous costs for businesses.
The law provides employers with ample flexibility for compliance. It allows them to manage costs by providing compensatory time in lieu of time-and-a-half pay. This flexibility would allow workers to take time off when business is slow to compensate for weeks when they must work more hours. If a business relies on its employees to work long hours but doesn’t want to pay overtime, it has the option of increasing base pay beyond the new threshold so that their workers no longer fall under the threshold.
Where there is cost on businesses, much of it will result from better enforcement of existing law. About half of the 28,000 workers who would start receiving overtime pay under the provisions of LD 402 should already be eligible because they don’t have “administrative, executive or professional duties.”[iv] The new salary threshold will eliminate the ability of employers to use hazy interpretations of those terms to exempt workers from overtime protection.
Mainers work hard, and they deserve to be paid fairly when they go above and beyond. Maine should enact LD 402 to restore the value of a 40-hour workweek for thousands of Mainers.
[i] Economic Policy Institute analysis of US Census Bureau, Current Population Survey, Annual Social and Economic Supplement. Analysis of all workers, including hourly workers. The salary threshold was $155 per week in 1975, the equivalent of $8,060 annually. In 2004, the threshold was increased to $455 per week, or $23,660 annually. See https://www.epi.org/publication/ib381-update-overtime-pay-rules/
[ii] MECEP analysis of US Census Bureau, Current Population Survey, Outgoing Rotation Group pooled data 2008-2017. After adjusting for inflation and scheduled changes to current Maine law, only 17% of salaried workers fell below the salary threshold ($33,000/year) in 2019. By 2022, this will rise to 20% of salaried workers.
[iv] Ibid. MECEP estimated which Mainers should already be overtime-eligible using methodology developed by the US Department of Labor. See https://www.govinfo.gov/content/pkg/FR-2016-05-23/pdf/2016-11754.pdf