The Number of Salaried Workers Guaranteed Overtime Pay Has Plummeted Since 1979
Though some employees are not entitled to overtime pay under the Fair Labor Standards Act no matter how low their pay is (school teachers, for example), most salaried workers (those earning more than the salary threshold amount of $455 per week, or $23,660 annually) are entitled to receive overtime pay if the duties they perform are not determined to be “executive, administrative, or professional.” Those duties include managing a business, a store or department, providing important technical advice to a business operation, auditing accounts and providing legal representation. Employees earning less than the threshold amount are guaranteed overtime pay regardless of their duties.
As the figure below shows, more than 12 million workers had salaries less than the exemption threshold in 1979. Today, because the salary threshold has not been indexed for inflation, only 3.5 million workers have salaries below the current $455 per week threshold and are thus guaranteed overtime pay. If the threshold set in 1975 had been indexed for inflation it would be $984 per week today. As the Obama administration prepares to announce a revised salary threshold that will make millions of salaried workers eligible for guaranteed overtime pay, this estimate of those currently covered establishes a baseline for evaluating the impact of the new threshold.
Figure A
Note: The nominal threshold was set at $250 per week from 1975 until 2004 when it was increased to $455 per week.
Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata