If you’re one of the millions working in retail, some days you might work late at the register or do the store opening in hopes of clocking a little overtime pay. And you might hope to eventually rise to a higher-ranked managerial position. But did you know that promotion might just mean a smaller paycheck for the same job?
Welcome to the promotion from hell: Federal law says time-and-a-half is for ordinary laborers, and management is exempt from overtime provisions. So congratulations, as a shop “manager,” you no longer qualify for overtime—but still end up doing basically the same work for less.
Generally, federal labor law requires elevated wages for hours worked over the standard 40-hour week. But in the precarious low-wage economy, advocates say employers are hyper-exploiting the system to skirt fair labor laws, and overtime is fast becoming a relic of the past.
The Obama administration is now seeking to modernize overtime, directing the Labor Department to revamp federal regulations. These set a baseline for state overtime laws (which may or may not offer more generous benefits). Reforms might bring long-overdue upgrades to income thresholds and professional exemptions in order to cover more of the workforce.
Currently, according to a report by National Employment Law Project (NELP), the Fair Labor Standards Act exempts “white collar” supervisors or managers from overtime, and effectively allows bosses to exempt even poverty-wage workers.
To qualify for the “white-collar exemption,” a worker must earn at least $455 a week (the level below which overtime always applies) and have a fancy title like “executive” or “administrative.” But this “white collar” income threshold amounts to a poverty-level annual family income today; back in the 1970s, in contrast some two-thirds of workers qualified for overtime. Additionally, NELP reports, “current regulations afford too much leeway for employers to misclassify employees who are not truly managers in any meaningful sense of the word or who do not exercise independent discretion.”