Editorial: Compensating salary workers 

Unless it’s a volunteer gig, workers should be paid for their time. While simple on its surface, that statement is rife with complications. Take the issue of the overtime threshold. 

Back in 2016, the U.S. Department of Labor was poised to implement a new overtime rule that would have increased the salary level at which employees can be denied overtime pay from $23,660 to $47,476 annually. That meant that salaried employees making less than $47,476 would be paid overtime for hours beyond the traditional 40-hour work week. However, a Texas district court declared the rule invalid. A less dramatic increase in that federal overtime threshold went into effect Jan. 1, 2020, bringing it to $35,568 per year. Maine calculates a slightly higher rate – $38,250 this year (3,000 times the minimum hourly wage). 

A bill being considered in the Legislature would push the envelope further than the 2016 federal proposal. Under the proposed legislation, the salary cutoff would increase to $55,224 by Jan. 1, 2024. That’s nearly the median household income in the state.  

Peter Gore, executive vice president for the Maine State Chamber of Commerce, called LD 607 “catastrophic” and the timing terrible as employers still grapple with the economic impact of the pandemic. The hospitality industry and nonprofits would be particularly hard hit, Gore said. Proponents counter that workers should be fairly compensated for their time. An assistant manager working a 65-hour week for a modest salary could be making less per hour than her hourly colleagues.  

Traditionally, salaried positions have been higher-paying jobs with more benefits – a tradeoff for open-ended schedules. In the 1970s, federal overtime rules covered more than 60 percent of salaried employees, but that number has dropped to about 20 percent of such workers, according to the Sun Journal. 

One of the biggest benefits of salary for employers and workers is consistency. Employers know how much money is going out and employees know how much is coming in. It can also afford mutual flexibility. Staying late to meet that important deadline may be part of the package. However, salaried employees are also less likely to have to punch the clock to account for every moment of their time. But what happens when regular, uncompensated overtime is just part of the business model? In a labor market such as this, companies risk losing employees. 

Employers have options if the higher threshold does pass. They could limit workers’ hours to 40 per week, pay overtime or raise salaries to maintain the overtime-exempt status. All easier said than done if you are a small nonprofit trying to meet enormous need on a shoestring budget. Or a short-staffed restaurant whose customers have little appetite for higher-priced meals.  

Protecting workers from exploitation is a worthy goal, but Maine’s labor market is already in a time of enormous upheaval. Some employees have voted with their feet, moving on to better-paying or less-demanding jobs. Employers are adapting to new realities. Better to let the current situation play out than to rewrite the rules midway.  

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