Schmudget Blog

Washingtonians should be paid for the hours they work

Posted by April Dickinson at Nov 29, 2018 06:30 PM |

Proposed updates to state overtime rules will improve work-life balance and increase income for hardworking people

 

By Liz Olson, State Priorities Partnership Fellow

We all want to live in a state where working people are fairly compensated for the hours they put in on the job, have the ability to balance work with their personal lives, and have a chance to get ahead. Governor Inslee and the Washington State Department of Labor & Industries have an opportunity to move us closer to this vision by modernizing our state’s overtime rules – a key labor protection for working people in our state.

Overtime protections are supposed to ensure that workers receive pay 1.5 times their normal rate when they work more than 40 hours in a week. Yet currently, more than 400,000 people in Washington are at risk of not being adequately compensated for their overtime hours, all because state leaders have not updated the rule that determines who is eligible for overtime protections in more than 40 years [1]. These include low- and moderate-income workers with little bargaining power, like frontline supervisors in the fast food and retail industries, paralegals, and office managers. These and many other workers have been left vulnerable to employers who can effectively get their employees’ time and money for free. 

Here’s the problem: Employers are not legally required to pay salaried workers overtime pay if they earn above a certain salary threshold and work in bona fide executive, administrative, or professional jobs. But in Washington state, the overtime salary threshold has become so eroded by inflation that it falls below what a full-time minimum wage worker would be paid in our state. What’s more, the “executive, administrative, and professional” (EAP) duties tests are imprecise and out of sync with the modern workplace, leaving room for workers to be improperly classified and denied overtime protections. 

Too many Washington workers’ earnings have stagnated even as they’ve contributed to substantial productivity growth in recent decades. Here’s why it’s time to update their overtime rules:

  • More than 400,000 workers in Washington would benefit if the salary threshold were raised to 2.5 times the state minimum wage in 2020 [2]. Of these, slightly less than half are employees that would gain access to overtime pay, and slightly more than half would benefit from decreased risk of being wrongly misclassified as EAP.
  • Expanded overtime protections would broaden access to financial security and better work-family balance for many people in our state. Even as lower-income employees work hard to move up in their jobs – for example, securing a promotion from an hourly cook to a salaried floor manager at a fast food restaurant – ineligibility for overtime pay can keep their hourly wage low as they’re expected to work ever-increasing hours. Overtime pay would mean would mean more money in the pockets of working people or valuable time back they could spend with their families and in their communities.
  • Raising the overtime salary threshold would strengthen labor protections for Washingtonians across gender, race, and ethnicity – and women and people of color would experience a particular benefit [3]. People of color and women are too often shut out of higher-wage jobs because of persistent employment discrimination, occupational segregation, and barriers to networks and other resources that connect people with good jobs. Due in part to their overrepresentation in low- and moderate-income positions, women and Latinx workers in particular are estimated to make up a slightly larger relative share of workers who would benefit from an updated overtime rule [4,5]. The chart below depicts the larger relative impact for women.

Click on image to enlarge.

Overtime changes 2018

 

Now is the time for Governor Inslee to act boldly on behalf of Washington’s workers. No one should be made to work without getting paid for it, and people in our state need a change to help bring their work, lives, and families back into balance.

[1] Economic Policy Institute (EPI) analysis of 2015-2017 Bureau of Labor Statistics’ Current Population Survey Merged Outgoing Rotation Group (CPS MORG) microdata. If the threshold were raised to $1,350/week in 2020, EPI estimates that more than 176,000 workers in Washington would newly qualify for overtime pay and another 229,000 would benefit from strengthened protections. (While the second group of workers is technically eligible for overtime already, they are at particular risk of being misclassified as exempt under the current rule’s EAP duties test because although they do not have executive, administrative, or professional jobs, they are paid a salary and earn above the salary threshold. Raising the salary threshold would make them eligible for overtime by their wages alone.)

[2] Ibid.

[3] EPI analysis estimates that while people of color (as a combined group) comprise approximately 27 percent of the salaried workforce in Washington overall, they represent approximately 30 percent of those who would benefit if the overtime salary threshold were raised to $1,350/week in 2020 (2.5 times the state minimum wage).

[4] EPI analysis estimates that approximately 198,000 male workers and 208,000 female workers in Washington state would benefit if the overtime salary threshold were raised to 2.5 times the minimum wage. CPS MORG data treat sex/gender as a binary category and we therefore do not have an adequate estimate of how this rule change would affect transgender and nonbinary people.

[5] While Latinx workers comprise 7.9 percent of the overall salaried workforce in Washington state, EPI estimates that Latinx workers would represent approximately 11.7 percent of those who would benefit from an overtime salary threshold of 2.5 times the minimum wage.

 

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