Several U.S. states are pushing new proposals that would boost the number of workers eligible for overtime pay by hundreds of thousands of people -- and Colorado may wind up being one of them.
Washington state is considering a rule that would more than triple the annual salary threshold that determines who qualifies for time-and-a-half pay when working more than 40 hours a week. The state’s Department of Labor & Industries in June announced its proposal to make most workers who earn less than $79,872 eligible for overtime by 2026. Public hearings on the rule are under way.
State legislators in Maine and Massachusetts have floated bills that would sweep more workers into overtime eligibility there, too, and Pennsylvania’s governor issued a proposal to bump up its salary cap.
The state-level efforts come in the wake of former President Barack Obama’s wish to extend overtime pay to an additional 4.2 million workers. His plan called for raising the federal salary threshold for overtime-pay eligibility from the current $23,660 to $47,476 during his tenure. A Texas judge blocked that rule from going into effect in November 2016, shortly after Donald Trump was elected president, citing federal overreach on the issue.
Change is still likely to come on a national level. Federal overtime rules are within the purview of the Labor Department, which in March proposed raising the federal salary threshold nearly 50% to make people who earn up to about $35,300 eligible for time-and-a-half pay.
New state proposals go far beyond that. Detractors of such measures argue that some businesses cannot afford to shoulder the extra costs and that things like people logging in to their work email at night make it hard to calculate how many hours they are working.
“The Trump proposal helped light a fire under state advocates because the threshold is so low,” said Naomi Walker, who directs the Economic Policy Institute’s state research and policy network. She expects to see campaigns to update overtime rules in states such as Colorado and Michigan in the coming months.
Currently, California and New York require employers to pay overtime to workers making far more than the federal ceiling.
In California, the salary threshold is twice the state’s minimum wage. Workers at large employers earning less than $49,920 are paid overtime now; in 2023, workers earning less than $62,400 will be eligible.
New York state is phasing in a $58,500 threshold, and the proposed Massachusetts bill calls for people earning less than $64,000 to be eligible for overtime by 2024. The rules often include exclusions for certain kinds of workers and employers.
Washington state is expected to complete and adopt its rule later this year and begin phasing it in starting in July 2020.
Eli Duffy, who manages a kitchen at a technology company in Seattle, can’t wait. She typically works 50 to 60 hours a week and makes $55,000 a year.
“I’m pretty much always exhausted,” she said.
Duffy estimates that she would have been able to pay off her student-loan debt if she had earned time-and-a-half for her extra hours this past year. Still, she said she would rather work fewer hours than get more money. “I really just want my life back,” she said.
Michael Haith, the chief executive of Denver-based fast-casual chain Teriyaki Madness LLC, called the Washington proposal egregious.
“We don’t do business in Washington state and that’s one of the reasons,” he said of the state’s labor regulations. The recent proposal “validates our decision.”
Still, Haith said he isn’t overly concerned about potential new overtime regulations in other states where Teriyaki Madness does operate, like Colorado. The labor market is already so competitive around the country that his restaurant managers can make up to $60,000, he said, more than the thresholds proposed in Pennsylvania and Maine.
If some of his staff are swept into overtime eligibility by new rules, Haith said he would probably keep them at 40 hours a week and hire more people, which might mean raising menu prices. Another alternative: doubling down on efforts already in motion to automate back-of-house duties, like slicing vegetables and washing dishes.
“We’re entrepreneurial and we’ll react. Will it affect some business models? Sure,” he said. “It will be evolve or die, I guess.”