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Blog: The overtime rule is the beginning of a much-needed cultural shift

Jun 1, 2016 / Media Coverage / Economic Policy Institute Blog — Dan Crawford

A recent New York Times piece features some choice handwringing over the Labor Department’s new overtime rule, from executives in “prestigious” fields, like publishing, advertising, film and TV, and public relations. These are all fields where low-salaried junior employees are often encouraged or even expected to work well over 40 hours a week, and the executives quoted by the Times are worried that they will no longer be able to expect such long hours without paying overtime.

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In order to ensure that low-paid employees are covered by the protections of the Fair Labor Standards Act’s overtime law, the Department of Labor mandates that workers must be paid time-and-a-half for every hour worked over 40 in a week, unless they qualify as an executive, administrator, or professional employee. In order to qualify for that exemption, a worker must make more than a salary threshold set by DOL and have sufficiently independent, high-level, and consequential duties, such that they truly are an executive, administrator, or professional worker. That salary threshold currently sits at $23,660 a year, but on December 1, 2016, it will be raised to $47,476 a year.

Under the new threshold, the assistant literary agents and junior associates who are expected to work well in excess of 40 hours a week will clearly and definitively be eligible for overtime pay. It is worth noting, however, that even with the low salary threshold in the current regulations, the workers in the Times story are almost assuredly not executives, administrators, or professionals as defined by DOL—so they are likely eligible for overtime regardless of their salary, and have been for quite a while. In other words, these firms were quite possibly breaking the law by not paying their junior employees for their time. The higher threshold simply shines a bright light that prevents them and many others from continued failure to follow the law.

Careers in the fields the Times looks at are often the sole provenance of privileged young graduates who can afford to sacrifice salary for prestige. Far from making these fields less accessible, the overtime rule could open them up—both by creating more jobs when firms have to hire two people to do the work they previously required of one, and by making these careers more appealing to people who can’t afford to take low-paying jobs in high-priced cities like New York and Los Angeles.

The Times is right that the changes to the overtime rule represent a profound cultural shift, but it should be a welcome one. The idea that young workers should cut their teeth by working long hours for low pay, or even for free, is the result of employers holding all the cards in the economy. It’s the same phenomenon that lets businesses get away with lax safety standards, unpredictable schedules, and offering scant benefits. By making it harder for employers to demand extra hours as part of the job, the overtime rule is an important tool to shift the balance of power towards working people.

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