When Mainers work long hours, they deserve to be compensated fairly for their extra work. Overtime protections exist to ensure extra work is rewarded with extra pay, or that workers are provided a salary that’s high enough to reasonably compensate occasional long hours.
Overtime compensation buttresses the cherished 40-hour workweek as a norm. It ensures full-time workers can expect a decent work-life balance and will be compensated fairly when their job consumes more of their time, taking them away from time reserved for family, community, or personal endeavors.
But thanks to the erosion of overtime protections over the decades, salary is often a trap that keeps Mainers working long hours without fair pay for their time. This year, legislators will have a chance to restore the promise of overtime for roughly 28,000 Mainers — guaranteeing that their hard work will be recognized with extra pay.
LD 607 — “An Act To Restore Overtime Protection for Maine Workers,” sponsored by Assistant House Majority Leader Rep. Rachel Talbot Ross of Portland — would make more workers eligible for overtime by increasing the salary level that employers must pay before an employee can be exempted from time-and-a-half pay.
LD 607 restores critical test for determining overtime eligibility
Overtime protection was established in federal law by the 1938 Fair Labor Standards Act (FLSA). But the FLSA does not apply to all employees, leaving many workers without its protections.
Traditionally, to be exempt from overtime pay, salaried workers had to meet two criteria: They had to work in a professional, administrative, or executive role and they had to have a high-earning job.
The definitions in the first criteria have become slippery in the modern job market, where it is increasingly difficult to definitively determine whether an employee is truly a “professional, administrative, or executive” worker.
This makes the definition of “high-earning” especially important.
While many people imagine that all salaried workers are exempt from overtime, historically only high-earning salaried workers could be made to work extra hours without additional pay. Overtime laws set a salary threshold that must be met before an employer can require a salaried employee to work unpaid overtime.
But the FLSA’s salary threshold for exempting workers from overtime is out of step with the needs of modern families, after decades of successful efforts by business interests to prevent updates to the threshold even as the cost of living has increased, and real wages have stagnated.
Today, federal law dictates that any salaried worker who earns more than $35,500 annually is considered “high-earning.” This incredibly low threshold, combined with overly broad categorization of workers as professional, administrative, or executive, means that nearly any salaried employee can be classified as exempt from overtime protection.
The erosion of overtime protections is evident in the share of salaried workers eligible for overtime pay: In 1975, 65 percent of salaried American workers were eligible for overtime compensation because they earned less than the salary threshold. Only 11 percent of salaried workers were deemed eligible for overtime in 2013.1
Maine is a leader in overtime protections, but can do better
Maine has established its own salary threshold rather than following federal law, giving state policymakers the flexibility to provide overtime pay to more workers. But that flexibility is underutilized: Today, Maine law requires that most private-sector employees $36,450 in 2021 be eligible for overtime pay. That’s just slightly more inclusive than the federal threshold of $35,500.
While no reasonable observer would call a salary of $36,450 “high-earning,” it means that four out of every five salaried workers in Maine earns too much to receive overtime pay.2
LD 607 would increase that threshold gradually to just over $55,000 a year by 2024, with a system for automatic adjustment thereafter. This would bring Maine closer to the number of workers covered by overtime in 1975 and would restore overtime for an estimated 28,000 low-wage salaried workers. These include social workers, nurses, restaurant workers, and others.3
It’s important to know that this bill would not result in enormous costs for businesses. The law provides employers with ample flexibility for compliance. If a business relies on its employees to work long hours but doesn’t want to pay overtime, it has the option of increasing base pay beyond the new threshold so that their workers no longer fall under the threshold.
Mainers work hard, and they deserve to be paid fairly when they go above and beyond. Legislators should support LD 607 to restore the value of a 40-hour workweek for thousands of Mainers.
Notes
[1] Economic Policy Institute analysis of US Census Bureau, Current Population Survey, Annual Social and Economic Supplement. Analysis of all workers, including hourly workers. The salary threshold was $155 per week in 1975, the equivalent of $8,060 annually. In 2004, the threshold was increased to $455 per week, or $23,660 annually. See https://www.epi.org/publication/ib381-update-overtime-pay-rules/
[2] MECEP analysis of US Census Bureau, Current Population Survey, Outgoing Rotation Group pooled data 2008-2017. After adjusting for inflation and scheduled changes to current Maine law, only 20 percent of salaried workers fell below the salary threshold ($36,345/year) in 2021.
[3] Ibid.
