Gov. Gretchen Whitmer on Thursday directed her Department of Labor and Economic Opportunity to write a rule that would go beyond a Trump administration measure that would expand overtime eligibility to employees earning up to $35,568 a year.
“In America, hard work should be recognized and rewarded. When I was growing up, that meant you got overtime if you worked more than 40 hours,” said Whitmer during a news conference in Detroit. “President [Barack] Obama took the first step towards restoring this right for millions of Americans five years ago, and if his proposed rule had taken effect, workers earning up to $51,000 today would be eligible for overtime pay.
Last month, President Donald Trump issued a rule expanding overtime pay eligibility, which increased the minimum salary for the “white collar” overtime exemption from $23,660 annually to $35,568 annually. Former President Barack Obama had sought to set the level at $47,476 in 2016, but the National Federation of Independent Business successfully sued to stop the effort in 2016. The Trump rule will be effective in January 2020.
“Strengthening paychecks is good for families, good for business, and good for our economy. It’s time to get it done,” Whitmer said.
According to the United Way’s ALICE (Asset Limited, Income Constrained, Employed) report on financially struggling households, families need an annual salary of $61,000 just to afford the basics and support a family of four. Families that live below the ALICE threshold struggle to pay for health care, childcare, car insurance and healthy food for their children.
Heidi Shierholz, former chief economist at the U.S. Department of Labor, reacted favorably to the Whitmer announcement.
“The Governor’s proposal embodies the idea of a fair day’s pay for a long day’s work is the right move for Michigan families and the Michigan economy,” Shierholz said.
More states are expanding the right to overtime pay. California is raising its threshold to $62,400 by 2022. New York is raising its to $58,500 by dates between 2019 and the mid-2020s varying by region. Washington and Pennsylvania are finalizing agency rules to raise it to $79,872 by 2026, and $45,500 by 2022, respectively. Massachusetts has proposed raising it to $64,000 by 2022, and Maine to $55,000 by 2022.
Once the request for rulemaking is submitted, the process to finalize an overtime rule could take between six to 12 months, Whitmer said.
Progress Michigan applauded her effort.
“When people go above and beyond in the workplace, they should be properly compensated for it and Gov. Whitmer clearly understands that simple fact. When employees don’t get paid for extra work, they’re getting ripped off by their bosses and that’s not right,” said Lonnie Scott, Progress Michigan executive director. “We need an economy that works for everyone and this is a great step toward ensuring hundreds of thousands of working people across Michigan are paid for the hours they’ve worked. Hours worked should be hours paid.”
Gilda Jacobs, Michigan League for Public Policy president and CEO, added: “For too many workers in too many fields, working more than 40 hours a week has become the expectation, not the exception, and with no additional pay. This rule change will improve worker pay and enable more people to better support their families. People work to make a living, but many people with full-time jobs are still struggling to get by — and expecting many of them to work more hours for the same money adds insult to injury.”
Rachel Lutz, a Detroit clothing and apparel store owner who employs 20 people, thanked Whitmer during the news conference.
“I do know that when my employees have extra money in their pockets, they spend it right back in the neighborhoods that they live in,” Lutz said.