Attorney General TJ Donovan has joined eight other state attorneys general in seeking to protect overtime pay for working-class people who work more than 40 hours per week.
The issue at hand is an overtime rule for salaried workers that former President Barack Obama’s Department of Labor attempted to implement. The rule raised the salary at which workers would not be eligible for time-and-a-half pay if they worked more than 40 hours in a week.
Historically, the salary threshold under the U.S. Fair Labor Standards Act has been $23,700 per year—meaning that only salaried workers making less than that have been eligible for overtime pay. The Obama administration rule raised that to closer to $47,500 per year.
The proposed rule would have forced employers either to start tracking and paying time-and-a-half overtime for millions employees across the country who make less than the threshold, or forced them to raise the salaries of those workers above that threshold to keep them exempt from overtime.
A federal judge in Texas struck down the rule in August The case has been appealed to the Fifth Circuit Court of Appeals, according to Donovan. Simultaneously, the U.S. Department of Labor continues to go through a rulemaking process on the issue, he said.
The U.S. Department of Labor sought comments from various parties as part of that process, Donovan said. He signed onto [a letter] with eight other states, led by his counterpart in New York.
“For me it’s a basic issue of fairness, and if you work overtime you should be entitled to be paid for overtime, especially for those lower-level employees,” Donovan said in an interview.
He said the law exempting certain employees from overtime pay was designed for well-paid professionals. Over time, he said workers who have become ineligible for overtime pay under the rule include first-line supervisors at fast food restaurants, clerical and office workers, medical and dental technicians, and other working-class people.
“I’m not talking about lawyers and doctors,” who should be paid overtime, Donovan said. “That’s not who I’m talking about. I’m talking about those—for lack of a better phrase—the folks who are lower-level employees on the hierarchy who often are working hard and are the backbone of a lot of organizations and operations.”
The Economic Policy Institute, a left-leaning think tank, estimated in 2016 that 25,000 Vermonters would be affected by the Obama administration’s proposed rule. That number is equal to 22.9 percent of salaried workers in Vermont, the think tank said.
Erin Sigrist, the president of the Vermont Retail and Grocers Association, which represents 800 companies, mostly small Vermont retailers, said she has encouraged her members to submit comments to the U.S. Department of Labor.
The group’s national counterparts at the National Retail Federation and National Grocers Association have both submitted comments, and Sigrist said she is considering sending comments on behalf of the Vermont group.
Sigrist said the salary threshold should be increased, but at a slower pace. She said the Obama administration proposed to more than double the salary threshold immediately, making it “a shock” to small businesses both financially and managerially.
“It needs to be (raised) in a responsible, sustainable, and predictable manner in which employers can plan and budget,” Sigrist said. “More than doubling the threshold is a drastic change that wouldn’t have allowed businesses the time to plan.”
Sigrist said employers often pay salaries to workers instead of hourly wages to allow them flexibility in their schedules. For example, a salary would allow someone to work 35 hours one week and 42 hours another week, without worrying about punching a time clock.
Complying with the original Obama administration rule would have meant starting to track those small variations in hours worked, she said. The other option—to raise the salaries of affected workers—is not possible for many small businesses, she said.
“It’s not that business owners don’t want to give raises,” Sigrist said. “It’s that business owners are operating on such thin margins now that they can’t give (employees) a raise.”
Donovan said he has received calls from Vermonters who oppose his position on the overtime rule. However, he said his support for the overtime rule and support for economic development go hand in hand.
“I think in this state we all want to do the right thing,” Donovan said. “We talk about affordability a lot in this state. This is about affordability. This is about fairness. This is about giving people a fair shake.”
“Fairness has to be part of the conversation when we talk about affordability, when we talk about economic development,” Donovan said.
Information on submitting comments is available [here].
https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-15666.pdf
