A newly unveiled federal rule on overtime pay, intended to give a bump in wages to low- and middle-income workers, will affect a greater percentage of West Virginia's workforce than any other state, according to an analysis from a national think tank.
The federal Department of Labor, which issued the rule on Wednesday, estimated that it will make 4.2 million more American workers eligible for federally required overtime benefits - generally time-and-a-half pay when a person works more than 40 hours a week.
Almost all hourly workers - those who get paid a set rate for each hour worked - get paid time-and-a-half for any hours over 40 per week.
But many salaried workers - those paid an annual salary, regardless of hours worked - do not get those same protections.
As the rule stands, salaried employees who make more than $23,660 a year and whose primary duties are "executive, administrative or professional" do not have to be paid time-and-a-half for overtime hours.
The new rule essentially doubles that threshold, to $47,476, making millions more workers eligible for overtime benefits.
The Economic Policy Institute, a progressive think tank that advocated for the overtime rule change, estimates that 12.5 million workers nationwide will benefit from the rule change. That number is much higher than the Department of Labor's estimate because the think tank includes workers who they believe are being misclassified by their employers as management.
Employees who make more than the salary threshold are still supposed to be paid overtime, unless they are "executive, administrative or professional."
There is a lot of nuance in that categorization. Does it include, for instance, an assistant restaurant manager or a construction site supervisor - people who may technically be management, but who are paid a fairly low salary and whose primary duties may be closer to those they supervise than to upper-level management?
That nuance is the reason for the big spread between the Economic Policy Institute's estimates and the Labor Department's.
"Their estimate is only 4.2 million people are having their rights changed by the rule. Millions more will have their rights strengthened," said Ross Eisenbrey, vice president of the Economic Policy Institute, and an author of the study. "There are millions who are not legitimately exempt [from the overtime requirements] because they're not really executives. They don't have control over the environment. Many of them do the same work as the people they're supervising."
The Economic Policy Institute estimates that 66,000 West Virginia workers will directly benefit from the change, which goes into effect on Dec. 1. That equates to 30.7 percent of West Virginia's salaried workforce, the highest share of affected workers in the nation.
The overtime rules were last changed in 2004, but have not been expanded this much since 1975.
Sen. Joe Manchin, West Virginia's lone congressional Democrat, said the rule would "help lift thousands out of poverty through hard work."
"Hard working West Virginian's salaries should keep up with inflation," Manchin said, noting that in 1975 the rule gave overtime protections to 62 percent of salaried workers, but it covers only 7 percent today.
The new rule also indexes the salary threshold to inflation and will be adjusted every three years.
Sen. Shelley Moore Capito is a co-sponsor, along with 40 other Republican senators, of a bill that would prevent the overtime changes from going into effect.
Capito said she was concerned with, among other things, the December implementation date, the possibility of salaried workers being reclassified as hourly workers and the ability of small universities and non-profits to absorb additional salary costs.
Nationally, business groups have strongly opposed the changes since the Obama administration announced last year that it intended to change the overtime rules.
Steve Roberts, president of the West Virginia Chamber of Commerce, said he had heard from employers who had deep concerns about the rule, specifically how it could force them to keep more exact records of their employees' work hours.
"I recognize that employer-employee relations are a balance between the needs of an employer and the needs and rights of employees," Roberts said. "But this is - I am hearing from companies that are saying - this is going to be a heavy burden."
Roberts pointed to certain instances when the overtime rule would reduce flexibility for employees to set their own schedule.
If, for example, an employee asks to work a Saturday in order to take off on Friday next week.
"The employer might say, 'We'd like to accommodate you, but the problem is we have to pay time-and-a-half if we do that,'" Roberts said. "As with so many things there is the unintended consequence of making rules that become complicated and restrict the ability of employers and employees to work these things out with flexibility in their own way."
Just because the new rule mandates that employers pay overtime rates to more salaried employees, does not necessarily mean that's what will happen.
The Labor Department anticipates a number of responses in reaction to the new rule.
If a newly covered worker makes, say, $25,000 to $30,000, and doesn't work too much overtime (maybe they average 42 hours a week), the employer may just go ahead and pay the time-and-a-half.
But for higher paid workers, it may be easier for the employer to just give the employee a raise.
For a worker who makes $40,000 a year, and averages 50 hours of work a week, it will be cheaper for the employer to just give the worker a raise, to bump them above the $47,476 threshold, than it would be to pay the overtime.
Eisenbrey cited post-doctoral researchers at universities, who work notoriously long hours for middling salaries, as among the most likely group of workers to get raises because of the new rule.
"These are the best-educated people in America and they've been getting screwed," he said.
Alternatively, the employer could choose to simply cut a worker's hours below 40 per week, a move contemplated by Rep. Evan Jenkins, R-W.Va., another opponent of the change.
"Instead of lifting up middle-class families, this rule will reduce working hours and force employers to make tough choices on hiring versus laying off workers," Jenkins said.
It is, however, important to note that because the new rule applies to salaried workers, not hourly workers, a cut in hours would mean fewer hours spent at work, but not less pay.
Reach David Gutman at david.gutman@wvgazettemail.com, 304-348-5119 or follow @davidlgutman on Twitter.