An estimated 23,000 Missouri workers will become eligible for overtime pay with the U.S. Department of Labor’s change to rules for employees working more than 40 hours per week, according to a department spokesperson.
While the Fair Labor Standards Act requires that most workers are paid overtime, there are exemptions for executive, administrative and professional employees.
Previously, these workers could only receive overtime pay if they made less than $455 per week, or around $23,700 per year. Starting in January, workers making up to $684 per week, or about $35,600 per year, will be paid time and a half for working more than 40 hours per week.
The $23,700 limit has been the same since 2004, when it was set during the George W. Bush administration. In 2014, the Obama administration attempted to nearly double that limit to $47,000, but a federal judge ultimately invalidated it, arguing it was too drastic of a change.
The change is expected to affect about 1.3 million workers nationwide.
Laborers in outstate areas are most likely to experience the expansion’s effects, St. Louis attorney Rex Fennessey said, because in larger metropolitan areas like Kansas City and St. Louis, most professionals are already making more than $35,600 per year. Fennessey works for McMahon Berger, a labor and employment law firm, and frequently represents employers in Fair Labor Standards Act cases.
The expansion will likely have a large effect on gas station and restaurant managers, who are often considered executive, administrative and professional employees because of their “manager” label, Fennessey said. That’s despite the fact that they perform similar tasks to the people they manage, who would be eligible for overtime pay.
University of Missouri law professor Rafael Gely, who teaches labor and employment law, said a common case he teaches revolves around the question of whether a group of managers at a dollar store would qualify for such exemptions simply because they’re labelled as “managers”.
The plaintiffs in the case had some managerial duties and discretion over the activities of the lower-ranking employees, but they were also stocking shelves and mopping floors, Gely said. They weren’t really “white-collar” workers in any real sense, despite having a few supervisory duties.
Gely said it’s likely that their bosses were taking advantage of the white-collar exemption.
“They were required to work really long hours,” Gely said, “but, because of this exemption, they were not entitled to overtime pay.”
In response to the rule change, employers will need to decide whether they want to raise these employees’ salaries to at least $35,600 or reclassify them as not exempt from overtime requirements. It’s possible that people reclassified as non-exempt will have their hours controlled in a way they weren’t before, Fennessey said.
He said that with the Obama-era limits, businesses were concerned about needing to significantly raise prices to compensate for the increased cost of overtime pay.
“The new rule is halfway in between, so it’s going to make it a lot easier for employers,” Fennessey said.
Overall, Gely said, the overtime eligibility expansion may not represent a big change from the Bush era when adjusted for inflation . Although the jump from $23,700 to $35,600 may be a big overnight change, most workers are already getting paid that amount.
It “might not have much effect on anything,” Gely said, adding that the Obama provisions would have had a much larger effect because they were introduced years earlier and would have effectively doubled the existing pay threshold.
Ashlyn O’Hara contributed to this report.