Report: Michigan workers lose $37M annually due to federal overtime exemptions

Michigan company to pay overtime after federal investigation. (WWMT/File - MGN)

A new report claims Michigan workers are not getting paid $37 million annually, due to current federal laws for overtime payments for salaried employees.

The National Employment Law Project (NELP) Action, a workers’ rights nonprofit, released a report detailing 271,000 workers in Michigan did not get paid for their overtime work, based off data from the U.S. from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW), the Economic Policy Institute and the Current Population Survey.

Federal law states employers can use exemptions to curb overtime for certain management positions that make $23,660 a year. NELP Action said in the report the overtime salary threshold for the exemptions was the equivalent of $61,200 a year, “and 62 percent of salaried workers in the U.S. were automatically eligible for overtime pay.” The report claims that level has dropped significantly to less than seven percent.

In May 2016, the U.S. Department of Labor changed the salary threshold – increasing the amount to $47,476 a year. Later that year, a 21 state attorney generals, including Michigan AG Bill Schuette, sued the Labor Department to stop the implementation of the changes. On August 31, 2017, a U.S. District Court Judge in Texas ruled the Obama era Labor Department’s rule was invalid – effectively leaving the overtime salary at the roughly $24,000 mark.

The NELP Action report said, “this overtime pay raise was blocked in Michigan and nationwide as the result of a lawsuit brought by Michigan Attorney General Bill Schuette.”

That attack, met with a response by Schuette’s Office that said:

“This is a liberal group trying to twist the truth, this attempted rule was a congressional run around done by the Obama administration that was shut down by the Courts.”

Michigan State Senate Minority Leader Jim Ananich (D – Flint) introduced legislation in October 2016 to change state law, raising the overtime ceiling. Senate Bill 1137 stalled in the Commerce Committee, which is chaired by Senator Wayne Schmidt (R – Traverse City). We received no response from Schmidt or his office when asked for a comment on this issue.

“We can have a conversation about whether you think my bill is the right way to go or not, but I think it’s hard to justify saying that somebody making $24,000 a year or less is a salaried employee,” said Ananich.

This session, Ananich has introduced Senate Bill 1123, that has the same language as his previous attempt, SB 1137. Ananich said it’s time to make some changes in the law.

“We haven’t changed the overtime requirements since the 1970’s so I can tell you for most people, I can’t think of very many people who are making the same amount of money,” he said. “It’s time to give people a raise.”

NELP Action put us in contact with ‘Julia’, a West Michigan retail manager who requested to stay anonymous for fear of retaliation from her employer. Julia said because she’s a manager in her store, and makes roughly $45,000 a year, her employer does not pay overtime.

“The most I’ve ever worked in a week is 102 hours and I’m exhausted,” she said.

She said if Michigan laws were changed, her employer would be forced to pay her for her overtime or, “Hire someone else to do the extra work I’m doing.”

Because she regularly works more than 50 hours a week, she said she can’t set money aside.

“If my overtime would have been paid, I would have been able to pay down my bills, even save for the future,” Julia said.

The U.S. Labor Department announced in late September that it will hold listening sessions for these overtime exemptions at locations across the country throughout September.

Other states, including Pennsylvania, Washington, California and New York are in the process of changing overtime their overtime laws.

Ananich said he hopes as the legislature comes back this session, "we get at least a committee hearing."

He said, “If you’re playing by the rules and working hard, why wouldn’t we pay people what they’ve earned?”

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