Managers Deserve Overtime- What Does the Law Say?

The 1970s was a golden age for American workers. Just look at the popular songs of the day: 1974’s “Takin’ Care of Business” by Bachman-Turner Overdrive, 1977’s “Take This Job and Shove It” by Johnny Paycheck, 1978’s “Blue Collar Man (Long Nights)” by Styx, 1980’s “9 to 5” by Dolly Parton, and 1983’s “She Works Hard for the Money” by Donna Summer. And these are just a few in an extensive catalog of an era’s odes to the working-class hero.

In those days, an hour worked equaled an hour paid, and if someone worked over their shift, they were compensated with an increased wage. Overtime pay was a common occurrence with more than 60% of employees earning a salary qualified for overtime income in 1975. A salaried worker in the seventies was four times more likely to earn extra pay than someone in today’s workforce, and most of this was earned by the middle class.

Over the last 50 years, college tuition has skyrocketed, mortgages and rents have risen through the roof, and inflation balloons. As the price of living soars, retirement savings shrivel, and the average hourly wage sinks while the time spent working increases without additional compensation.

In other words, most Americans have consistently been underpaid while being overworked. The modern worker makes less money for working longer hours than most of their grandparents did. Many young people in the workforce do not know that if they work more than 40 hours in a scheduled workweek, any time over that is considered overtime, and their earned wage should become 150% of their normal wage.

Currently, only 15% of America’s salaried employees receive overtime pay. In most cases, employees work more than 40 hours and get paid nothing extra, essentially working for free. For decades, employers have found new ways to exploit this free labor pool.

The wealth divide has reached Gilded Age proportions. Income inequality widens—profits rise, and wages fall into the gap.

Everybody is Working for the Weekend

The Organization for Economic Cooperation and Development (OECD) reports that, on average, a majority of Americans (54%) work between 40 to 49 hours each week. More than 20% work 50-59 hours, and almost 10% of the more than 150 million workers put in more than 60 hours at work. Yet somehow, only 15% of these workers qualify for overtime pay.

This was especially applicable during the COVID pandemic when millions were working from home and finding it hard to separate their work and private lives.

According to federal law, employees working as managers need to earn less than $35,568 annually or $684 weekly to have a right to overtime pay. During the Obama administration, a new overtime threshold of $47,000 was proposed, but 21 states and the U.S. Chamber of Commerce halted the increase by suing the administration and alleging government overreach. The current threshold was agreed on in 2019 during the Trump administration.

California has its own threshold, progressively increasing each year and currently sitting at the minimum annual salaries of $58,240 for employers with fewer than 26 employees or $62,400 for employers with more than 25 employees.

Typically, employees exempt from overtime pay are

• Administrators
• Contractors
• Executives
• Licensed professionals
• Managers
• Outside salesmen
• Supervisors
• Other high-level employees that require independent judgment

Many of these workers are excluded because they are miscategorized as managers or supervisors instead of employees who perform managerial duties. Under California law, employees can only be classified as exempt if:

1. They spend more than 50% of their work hours directing at least two subordinates
2. Their annual salary exceeds the minimum wage threshold

This direction of subordinates includes powers like firing and hiring capabilities. Supervising other employees does not automatically require overtime exemption because, in usual circumstances, a supervisor is performing the same primary tasks as their subordinates.

If a manager is working overtime hours because the employer has not hired the appropriate number of employees to do a job, the manager has a right to overtime pay, even if the manager supervises other employees while being overworked.

An employer paying an employee a salary instead of an hourly wage or adding a nomenclature like manager, leader, supervisor, or director to an employee’s Human Resource file does not also mean the employee is required to work overtime hours for free.

Employees can file a claim against any employer that violates California’s overtime laws that withhold wages. Employees may sue for:

• Backpay
• Interest
• Penalties
• Undue suffering

Meet the New Boss, Same as the Old Boss?

Overtime protections have been under attack since FDR’s New Deal first established them. National industry groups and the U.S. Chamber of Commerce argue overtime pay adds an additional economic burden to employers. The current business lobby makes similar claims, citing the damage these changes could have on small businesses and nonprofits.

Creative management by fearful employers often solves these problems with moves like hiring appropriately, changing the scale or operations, or cutting out needlessly repetitive tasks or duplicate efforts.

Joe Biden always touts his support of the working class, and since becoming president, he has continuously spoken about the administration’s pro-worker agenda. This includes:

• Ensuring workers receive the pay and benefits they deserve
• Increasing the number of workers who qualify for overtime pay
• Encouraging and incentivizing unions and collective bargaining
• Expanding worker protections
• Holding corporations and companies accountable for violating of labor laws
• Wage increases for federal workers

Lawmakers have also been discussing and proposing bills that cater to a modern workplace, amending the federal workweek to 32 hours and requiring overtime pay for nonexempt workers when they hit hour 33.

This progressive approach to the labor force seems to be taking targeting measures toward overtime pay. The Economic Policy Institute (EPI) projects federal labor laws will follow the lead of states like California, New York, and Washington by adopting laws that strengthen overtime protections. The EPI envisions the federal salary thresholds to increase to more than $82,000 by 2026.

In his recent speech, Biden claimed that passing the American Rescue Plan, the Protecting the Right to Organize (PRO) Act, and the Infrastructure Investment and Jobs Act is really about “rebuilding the middle class” and allowing “more workers to have a voice on the job.”

Having a voice in the workplace also means restoring the dignity of American workers by ensuring workers the appropriate pay for the hours they work.