EPI: Trump’s Labor Department overtime pay cap ‘abandoned’ millions

WASHINGTON (PAI)—The GOP Trump Labor Department’s increase in the annual pay cap beyond which workers could be ineligible for overtime “abandoned” millions of workers, a top labor economist says.

Heidi Shierholz of the Economic Policy Institute, DOL’s chief economist for former Democratic Labor Secretary Thomas Perez, called the hike, to $35,308 yearly “a ruse.” That’s because the cap hasn’t been raised in 15 years – and because Trump dumped Democratic President Barack Obama’s prior hike in the cap, to $47,476.

“I estimate roughly 8.2 million workers who would have benefited from the 2016 (Obama) rule will be left behind by the Trump administration’s rule,” Shierholz said.

“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 five million who would have gotten strengthened overtime protections under the 2016 rule and won’t get them under the Trump rule,” she explained.

The Obama figure was double the current cap, $23,660. Beyond that figure, workers could be deprived of overtime pay, no matter how many hours they toil over the 40-hour mini-mum per week  — unless a union contract covers them. That still holds with the new DOL cap.

The Trump administration also rejected commenters’ requests to index future hikes in the cap to inflation. And it left in place definitions of current exceptions for overtime pay for “executive, administrative and professional” employees. Some 200,000 comments came in.

Those three exceptions are so wide that when GOP President George W. Bush’s DOL raised the pay cap to its current level, some low-level occupations – such as newspaper editorial assistants and delivery drivers – were deemed “professional” and exempt.

Trump’s DOL touted the overtime pay hike cap – beyond which workers not covered by union contracts may not get overtime – as helping 1.3 million workers.

“The new Trump administration overtime rule cheats workers out of $1.4 billion in the first year — and that amount will grow over time because the rule doesn’t include indexing,” Shierholz retorted in a tweet.

And even the $35,308 figure isn’t hard and fast. DOL will let “employers use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10% of the standard salary level,” the agency said.

DOL also said there will be “no changes in overtime protections” for workers in four professions who put in huge amounts of overtime: Fire Fighters, nurses, EMTs, and police.

There also won’t be any changes for “laborers including non-management production-line employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, ironworkers, craftsmen, operating engineers, longshoremen, and other construction workers.”

Several states haven’t waited for Trump’s DOL to act. They raised their overtime pay caps anyway. Washington is the latest to do so.

Gov. Jay Inslee (D) announced its hike the same day Trump’s Labor Department did. Its increase in the overtime pay cap would rise yearly, to 2-1/2 times the state minimum wage by 2026, Inslee said, helping 250,000 workers in that state alone. Washington state already has one of the higher state minimums in the U.S.

“Washington is stepping up to protect its workers where the federal government has not. Updating our decades-old overtime rule is one sensible step to ensuring more workers share in our prosperity,” the governor explained.

Trump’s plan “is way too weak and totally insufficient to restore the basic protections of the 40-hour workweek,” said Washington State Labor Council President Larry Brown. “Because the overtime pay protections have been allowed to erode for decades, millions of Americans have been forced to work longer and longer hours without extra pay. If everyone who makes just $35,000 per year can be denied extra pay, it’s like their time doesn’t count.”

“The Trump administration has written a new rule that assumes people making $35,000 a year are highly paid executives who do not need overtime protections,” House Education and Labor Committee Chairman Bobby Scott, D-Va., said sarcastically. “This overtime rule is a missed opportunity to address the fundamental challenge in our economy – workers are not getting their fair share of the profits they produce.”