Press Releases

News from EPI Schrader bill would gut the Department of Labor’s new overtime rule

The Overtime Reform and Enhancement Act, introduced by Rep. Kurt Schrader (D-Ore.), would hurt workers with low salaries who would benefit from the Department of Labor’s updated overtime pay rule. The bill would undermine the overtime rule by delaying increases in the overtime threshold and eliminating the rule’s indexing, which would raise the threshold automatically every three years as wages for salaried workers rise.

According to an EPI analysis, eliminating indexing would mean 10.4 million fewer salaried workers would get overtime protection by 2035. The share of the salaried workforce that would qualify for overtime protection would be cut in half, from 32.7 percent to just 16.1 percent.

“Rep. Schrader wants to reproduce the very disaster for working people the Department of Labor is seeking to prevent: an inevitable and significant loss of guaranteed overtime pay coverage due to inflation and wage growth,” said Ross Eisenbrey, an author of the new report.  “That’s why the business lobby wants the bill.”

Failure to adequately update the salary threshold from 1975-2015 caused the share of the salaried workforce that was guaranteed overtime pay to fall from 49.6 percent to just 9.5 percent in 2015. Indexing the threshold to wage growth prevents this erosion from reoccurring.

Meanwhile, by delaying the full increase in the salary threshold by three years, the bill would prevent or delay millions of working people from receiving overtime protections. On December 1, 2016, 6.3 million fewer working people would be covered. A year later, the threshold would rise to only $39,780, leaving 4.6 million fewer employees protected. In 2018, 1.7 million fewer employees would be protected. And even in 2019, because of inflation and wage growth, when the Schrader bill would finally raise the threshold to DOL’s original level of $47,476, it would cover 2.1 million fewer employees.

“Wages for workers have been flat for 35 years while CEO pay and top 1 percent income have skyrocketed. The new overtime rule is a small but important step in reversing the trend and allowing some salaried workers at the lower end of the pay scale to get paid fairly when they work hard,” said Eisenbrey. “The Schrader bill would hit workers in the paycheck and would re-create the erosion of overtime pay that has hurt the American middle class.”