Letter to the Hon. Marty J. Walsh, Secretary of Labor - Reps. Adams, Takano, Scott and Sen. Brown Urge Secretary Walsh to Restore Overtime Pay Protections for Millions of Workers

Letter

Dear Secretary Walsh:

We write to urge the Department of Labor (DOL) to take strong action to restore overtime pay
protections for millions of workers.
Under the Fair Labor Standards Act (FLSA),1 covered employees are guaranteed overtime pay
of not less than one-and-a-half times their regular pay rate for any hours worked in excess of 40
hours in a workweek.2
Overtime standards were created to prevent workers from being forced to
work excessive hours without additional compensation and to incentivize employers to hire
additional employees rather than overworking current ones.3
The FLSA does, however, exempt
from overtime protections bona fide executive, administrative, and professional employees
("white collar" exemption),4 who are likely to possess the individual bargaining power needed to
push back against substandard wages and excessive working hours.5

Under FLSA regulations, salaried employees who earn below a certain salary threshold do not
fall under the "white-collar" exemption and are thus automatically eligible for overtime pay.6

An inadequate salary threshold decreases the number of workers who are eligible for overtime
protections based on their pay, making more workers vulnerable to being misclassified as exempt
by their employers. In 1975, more than 60 percent of full-time salaried workers earned less than the salary threshold and were eligible for overtime based on their pay. 7
In 2016, when the salary
threshold had languished at $23,660 for over a decade, that number was less than seven percent.8
In 2016, the Obama Administration's DOL finalized a rule (Obama Rule) that would have
increased the salary threshold to the 40th percentile of earnings of full-time, salaried workers in
the lowest wage Census Region, a rate equaling $47,476 in 2016. 9
This threshold represented a
conservative salary threshold. Historically, the salary threshold has ranged from the 35th to 55th
percentile of weekly earnings for full-time, salaried workers nationwide.
10
The Obama Rule,
announced by then Vice President Biden in Columbus, Ohio, was nonetheless a step in the right
direction after years without a meaningful update.11

The Obama Rule would have partially restored the value of the salary level by ensuring 33
percent of full-time salaried workers were eligible for overtime protections based on their pay.12

It would have extended overtime protections to 4.2 million workers and strengthened existing
overtime protections for an additional 8.9 million workers.13
The Obama rule would have also
established automatic updates every three years to reflect increases in wages over time and
ensure the salary threshold was not eroded.14
Unfortunately, in 2017, a Texas federal district
court invalidated the Obama Rule based on flawed reasoning that rejects the jurisprudence and
legislative history behind the white-collar exemption.15
Instead of defending the Obama Rule before the Fifth Circuit Court of Appeals, the Trump
Administration finalized a rule (Trump Rule) that fell far short by setting the salary level to
$35,568 per year in 2020 with no automatic increases, allowing its value to be eroded over
time.16
The Economic Policy Institute (EPI) estimates the Trump Rule, in effect since January
2020, covers only 15 percent full-time salaried workers based on their pay.17
EPI further
estimates that the Trump Rule leaves behind 8.2 million workers who would be covered under
the Obama Rule, costing workers $1.2 billion in lost wages each year. 18

Even before the pandemic, our nation's weakened labor standards, including an out-of-date
federal minimum wage and inadequate overtime pay standards, left too many workers unable to
earn enough to provide for themselves and their families. The pandemic has only underscored
and exacerbated these conditions. Many workers, including essential workers, are overworked
and underpaid. Other workers struggle to work enough hours to make ends meet. These workers
deserve a raise.
As our economy recovers, it is imperative that we prioritize policies that boost pay and
encourage hiring. Extending overtime protections by raising the overtime salary threshold will
boost wages for millions of lower- and middle-income salaried employees. It will also help
prevent these employees from working excessive hours and instead incentivize employers to hire
additional employees or shift hours to the underemployed, part-time workers who need them.
That is why it is critical that the Biden Administration's DOL pursue bold action to provide more
workers with overtime protections. We urge DOL to quickly begin the rulemaking process to
update the salary threshold and to propose a strong threshold. We encourage DOL to adopt a
salary threshold in line with the historical high point of salary thresholds--the 55th percentile of
earnings of full-timed salaried workers nationwide. This threshold would be at least $82,732 by
2026.19
We also suggest DOL include annual automatic updates to prevent erosion of the salary
threshold over time.
Now, more than ever, it is critical that we stand up for millions of low-income and middle-class
workers and defend the 40-hour workweek. We thank you for your attention to this matter.

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