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.”
NELP recommends (1) raising the weekly overtime income threshold to at least $984 and as high as $1,327 ($69,004 yearly) and (2) limiting exemptions to workers who “truly exercise independent judgment in performing the job.”
For example, the senior shelf stocker at Big Box store may be required to spend a few weeks a year training new hires. Then her boss “promotes” her by slapping on a new middle-manager name tag that automatically disqualifies her from time-and-a-half. Meanwhile her daily schedule and general duties at the store remain unchanged. So the “white collar” exemption, originally intended for affluent professionals, invites the dubious recasting of front-line workers as “managers” by essentially swapping uniforms without expanding authority or compensation.
“Because of that little bit of managerial and supervisory work they do, they lose out on that extra pay that they should have,” says NELP Federal Advocacy Coordinator Judith Conti. In turn, “they don’t have extra hours to spend with their family or in their own lives…. It’s really a big loophole and a way to game the system.”
In one case study in NELP’s report, Wanda Womack, a manager at an Alabama Dollar General store, worked 50-to-70-hour weeks overseeing several employees and handling scheduling and payroll. But because the chain kept the store understaffed and under-budgeted, she had to do double duty, spending her excessive hours mostly “performing non-managerial tasks…working the cash register, performing inventory, and unloading freight, none of which were managerial tasks.”
According to NELP, Womack would have qualified for overtime if her formal classification had reflected her real job and if her income level—less than $40,000 annually—had been measured by a properly adjusted overtime threshold indexed to inflation. Instead, injury forced her out of work in 2004; the manager left her 11-year career to manage her chronic shoulder, back, and neck injuries, which resulted from the heavy freight lifting her “white collar” job somehow required. After filing a sex-discrimination class-action suit, Womack told the Huffington Post in 2013, “It really took 20 years off my life because of all the muscle pains.”
Along with preventing the social damage of overwork on people like Womack, overtime benefits the whole workforce by ensuring that non-standard extra hours demand more expensive pay scales. In tandem with a minimum wage, this wage premium anchors a social consensus around what people should reasonably expect from their jobs.
The unemployed suffer as well. When they can circumvent labor standards, bosses may see overwork or marginal part-time hires as more cost-efficient than creating more full-time or better-paid positions. NELP explains, “if there is so much work to be done that more than 40 hours per week from staff is regularly necessary to accomplish it, the overtime premium creates an incentive for employers to hire more people, rather than overworking their existing employees.”
A fairer balance between workforce and work time is actually built into the new San Francisco Retail Workers Bill of Rights, which seeks to “spread work” and encourage full-time employment by mandating that, when seeking to expand a staff’s operations, an employer must “offer those hours of work first to existing qualified employees before hiring additional part-time employees.”
It’s true that some workers want overtime hours to supplement income. But that’s often a problem of wages being too low for their regular hours. That’s why we should look at raising the minimum wage or other crazy New Deal ideas like encouraging collective bargaining.
“The higher your wages are, the more likely you can support yourself and not want the overtime,” Conti says, while among the un- and underemployed, ”all of these folks [who are now] perhaps cobbling together all of these part-time jobs maybe can get a full-time job with benefits instead.”
While the modern economy falls out of sync with the traditional workday, overwork, sadly, becomes part of many job descriptions. Those under-compensated hours could be better spent in truly worthwhile ways: spending time with family, pursuing education, or just resting.
We can start to revive the principle of “eight hours for what we will” by upgrading overtime. Imagine how much more complete our lives could be, if we reclaimed the time wasted chasing that paycheck that never quite adds up.