A Trump Win Could Impact Overtime Pay For Millions

In poll after poll, U.S. voters list the economy as their top concern heading into this year’s presidential election. Yet there’s a major economic issue looming that has gained almost no attention throughout the 2024 campaign: whether millions more U.S. workers could be eligible for overtime pay.

Most hourly workers get time-and-a-half pay when they work more than 40 hours in a week, under a law that’s been in place since the Great Depression. But the rules are less straightforward for employees on salary, and business lobbies have fought for years to keep as few salaried workers as possible eligible for extra pay.

A Donald Trump victory in November would almost certainly give employers the upper hand in this fight.

Earlier this year, the Biden administration finalized a rule that would significantly raise what’s known as the overtime “salary threshold” — the level below which most salaried workers are automatically guaranteed overtime pay. The Trump administration had set the threshold at just $35,568; Biden’s rule would send it up to $58,656 next year, then index it for inflation in the future.

That means if you’re a salaried worker earning below that amount annually, you would likely qualify for time-and-a-half pay if you work beyond 40 hours. The Biden administration estimates that by hiking the threshold so much, an additional 4 million workers would be covered by the law. (The Harris campaign didn’t respond when asked for her position on the overtime threshold, but Harris has not previously distanced herself from the Biden administration rule, which was rolled out in April.)

But the regulation’s future is uncertain due to court challenges — and that’s where the election comes into play.

A Trump campaign spokesperson didn’t respond to emails asking where the former president stands on this issue. But if history is any guide, the GOP nominee would probably limit any overtime expansion so that fewer workers are eligible for it than under Biden’s proposal.

When Trump arrived at the White House in 2017, his predecessor, President Barack Obama, had recently implemented a rule that would have hiked the salary threshold to $47,476, impacting an estimated 12 million workers. But business groups had sued to block it and won a temporary injunction that put the regulation on ice.

The Trump administration declined to defend Obama’s rule in federal court, effectively killing it. Instead, it imposed its own threshold of $35,568, covering vastly fewer workers. That rule took effect in 2020 without opposition from the employer lobby.

Given the court fight already brewing over Biden’s rule, a victorious Trump could find himself in a position to again let an aggressive overtime reform die on the vine.

Heidi Shierholz, who was chief economist at the Labor Department during the Obama years, said that’s exactly what she would expect the business mogul-turned-politician to do. Even though Trump’s 2020 overtime rule expanded overtime eligibility to some workers, Shierholz said it betrayed the Obama plan by not going nearly far enough.

“It is set at such a level that it just doesn’t impact all that many people,” she said. “It’s just a really weak standard.”

Overtime pay used to be a lot more common in this country, but failure to update the regulations has made a smaller share of the workforce eligible for the premium, Shierholz said.

The system ends up encouraging companies to heap additional work onto salaried employees who are exempted from the law, since those workers are essentially working for free after 40 hours. Dollar stores, in particular, are infamous for forcing retail managers to work 60 or 70 hours a week, rather than providing enough payroll to hire additional hourly employees.

Republicans have reliably opposed any major increase to the salary threshold that would greatly expand protections. Rep. Virginia Foxx (R-N.C.), chair of the House committee that oversees labor issues, called the Biden rule “a bad deal for American employers and workers,” and praised Trump’s watered-down rule as a “compromise.”

Trump has recently come up with an overtime plan of a different sort. Consistent with his campaign theme of promising people free goodies, the candidate said at a rally earlier this month that if elected he would end taxes on overtime pay. It’s a proposal that echoes an earlier pledge to service workers that he would eliminate taxes on tips. (Harris endorsed the same concept, but paired with raising the minimum wage.)

The Trump campaign has not released a detailed plan on how the no-taxes-on-overtime idea would work. Any such change to tax law would require the cooperation of a bitterly divided Congress.

Like the tips plan, ending federal taxes on overtime would not only reduce tax revenue but would stratify workers into different classes for tax purposes.

These reforms would also encourage non-standard work arrangements ― like getting paid in tips, or working crazy-long hours, as opposed to a regular 9-to-5 ― and could be gamed by high earners to avoid taxes.

Shierholz said a better idea might be to boost the overtime pay premium ― from time-and-a-half to, say, time-and-three-quarters. But she doesn’t think Trump wants a policy plan so much as a campaign sound bite.

“I just don’t take it seriously because of his long history of undermining these very workers,” she said.