Overtime Pay: New Rules to Make More Workers Eligible

Summary

---

Episode Overview

Title: Overtime Pay: New Rules to Make More Workers Eligible
Date: August 8, 2019
Host: J.R. Whalen
Guest: Rachel Feinsig, Wall Street Journal Reporter

This episode of WSJ Your Money Briefing explores upcoming changes to overtime pay rules in the United States. With both federal and state reforms in the works, the conversation highlights who will be affected, how new salary thresholds are being set, and what these changes mean for employers and employees in a modern, flexible work environment.

---

Key Discussion Points & Insights

1. Background on Overtime Pay Reforms

• The episode opens with J.R. Whalen providing a quick financial news update before shifting focus to the main story: significant changes in overtime eligibility rules at both the federal and state levels.
• Rachel Feinsig explains that while the Obama-era federal rule—designed to expand overtime eligibility—was halted by courts, states are now stepping in with their own regulations.
  • Quote:

    "These are new states that are kind of stepping up to fill that gap. Some of them are proposing basically what Obama had proposed. Some are going even further to usher even more people into overtime eligibility."
    — Rachel Feinsig, 02:56

2. Federal vs. State Overtime Thresholds

• President Trump’s administration proposed a new federal overtime salary cutoff at $35,308, with rulemaking still underway.

  • Quote:

    "The Trump administration overtime proposal would set the level at $35,308. Anybody making up to that level would be eligible for OT. Is that stuck in the courts as well?"
    — J.R. Whalen, 03:19

• Feinsig clarifies that this federal rule is still moving forward but will be superseded in some states by even higher thresholds.

  • Quote:

    "Some of these new state rules will make that level kind of moot in some... states... Because they're going to go so far beyond that."
    — Rachel Feinsig, 03:32

---

3. States Leading the Way: New York & California

• California and New York are cited as leaders in implementing higher overtime salary thresholds:

  • California:

    • Large employers: Overtime eligibility for those earning less than $49,920 (already in effect at the time of recording)
    • Small employers: Threshold set at $45,760
    • By 2023, the threshold will increase to $62,400

  • New York:

    • Varies by region and employer type
    • Thresholds are being phased up to around $58,500 in the next few years

  • Quote:

    "In California already, those at large employers making less than $49,920 and those at small employers making less than $45,760 are already eligible for overtime. And by 2023, that level pushed up to $62,400. In New York, it varies depending on where you are in the state as well as what type of employer you. They'll be going up to around 58,500."
    — Rachel Feinsig, 03:53

---

4. Labor Market Context: Tight Conditions and Employer Impact

• The episode notes that these changes are occurring during an unusually tight labor market, reducing their shock to employers.

  • Quote:

    "Some of them told me, like, we're already having to deal with this. We're already having to pay more to get people. So these rules aren't the huge shock that they may have been, you know, a decade ago."
    — Rachel Feinsig, 04:36

• Despite this, some businesses, particularly in states like Washington, are expressing concern about costs and the complexity of tracking work hours.

  • Quote:

    "A lot of employers do not like these rules. You know, they fought these in the Obama era as well. You know, they worry about mounting costs. They also say it's just hard to keep track of how much people are working. Like, we're all working at night on our cell phones. Every time you log into work email, that does count as work time. So how do we take that into account when determining how much overtime pay people are owed?"
    — Rachel Feinsig, 04:55

---

5. Modern Work Patterns Complicate Overtime Calculations

• J.R. Whalen and Feinsig discuss how flexible work arrangements and remote connectivity challenge conventional timekeeping.

  • Workers increasingly check email or perform tasks outside of the traditional 9-to-5 schedule.

  • Key issue: How do companies account for short, off-the-clock tasks that add up to overtime?

  • Quote:

    "It's just that everyone is able to kind of work at all times. So before, if it was just you punch in, you punch out, I see how many hours over 40 that you were in my store and I know that I need to pay you overtime. Now, like I said, if you're doing 15 minutes of work at home, does that count? And how do companies keep tabs on that?"
    — Rachel Feinsig, 05:31

---

Notable Quotes & Memorable Moments

• On the changing legal landscape:

  "These are new states that are kind of stepping up to fill that gap. Some of them are proposing basically what Obama had proposed. Some are going even further..."
  — Rachel Feinsig, 02:56

• On employer challenges:

  "They also say it's just hard to keep track of how much people are working. Like, we're all working at night on our cell phones. Every time you log into work email, that does count as work time."
  — Rachel Feinsig, 04:55

• On the evolving definition of work hours:

  "In a gig economy, you could be driving in your car, you could be shopping in a store, and that's really part of your work hours."
  — J.R. Whalen, 05:19

---

Key Timestamps

• [00:36] — Episode theme introduction: Major changes looming for overtime eligibility
• [02:56] — Rachel Feinsig joins to discuss the post-Obama overtime policy landscape
• [03:19] — Federal threshold update and state rule comparison
• [03:53] — Breakdown of California and New York’s aggressive new overtime thresholds
• [04:36] — Employer adaptation amid a historically tight labor market
• [04:55] — Employer pushback: tracking work in a digital, always-on environment
• [05:19] — The gig economy and the blurred lines of working hours

---

Summary

This episode delivers a concise yet nuanced overview of how overtime pay rules are evolving in the U.S., highlighting the shift from stalled federal reforms to ambitious state-led initiatives—especially in New York and California. Listeners gain a clear understanding of the salary thresholds, the labor market context, and the real-world challenges employers face in tracking work hours amid changing workplace practices. The discussion, rich with quotes and contextual insights, is essential for anyone affected by or interested in wage and hour law reform.

Transcript

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Representative]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Representative]

they need while increasing megastore profits. They deserve it, don't they?

[Consumer Advocate]

Tell Congress stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whalen]

Here's your money briefing. I'm J.R. whelan at the Wall Street Journal in New York. We've got details in a moment on how lots more American workers are about to be eligible for overtime pay. First, some money in market news you should know. Some troubling news from the American Bankruptcy Institute. The group says There was a 5% increase in total bankruptcy filings among consumers and businesses in July of this year from the previous month. That comes out to 64,283 filings in July. That rise, however, follows a 10 year low in bankruptcy filings. Still, though, the rise in filings is an indication of people taking out more loans without proper financial stability or they're facing an unexpected life event like illness or job loss. And we've told you how automated advisor firms like Betterment and Wealthfront, along with savings arms of big banks like Marcus over at Goldman Sachs, have taken aggressive steps in offering relatively high interest yields on cash to attract customers. Well, now Fidelity, one of the biggest brokerage firms, is joining the race. Fidelity manages about $8 trillion in assets and says it is going to begin automatically sweeping cash in new brokerage and retirement accounts into a money market fund yielding 1.91% per year. That's quite a bit higher than the 0.2% national average yield on money funds and.09% on savings account balances. Brokerages have given up revenue in the form of trading fees and financial advice. So this is a crucial way to bring in more cash. Now Fidelity isn't the first brokerage firm to do this in recent years. Charles Schwab began sweeping uninvested client cash into low yielding brokerage products. In fact, Schwab's bank made more than half the company's overall revenue of of $10.1 billion last year. That was up from 29% of overall revenue a decade earlier. New rules are in the works that are going to make hundreds of thousands of more people eligible for overtime. And Wall Street Journal reporter Rachel Feinsig is on the line with us with some details. So Rachel, these proposed rules go back to the Obama administration. And even though there have been some legal hurdles, it looks like these rules are going to become, well, kind of.

[Rachel Feinsig]

So it's not the federal Obama standard that's going to be going into effect. That that proposal did kind of die in the court System starting in 2016. These are new states that are kind of stepping up to fill that gap. Some of them are proposing basically what Obama had proposed. Some are going even further to usher even more people into overtime eligibility.

[J.R. Whalen]

Now, the Trump administration overtime proposal would set the level at $35,308. Anybody making up to that level would be eligible for ot. Is that stuck in the courts as well?

[Rachel Feinsig]

No, that is proceeding, and we should have a ruling on that before too long. But some of these new state rules will make that level kind of moot in some points in some states. Excuse me. Because they're going to go so far beyond that.

[J.R. Whalen]

And New York and California have two of the more aggressive overtime pay rules that are coming into effect.

[Rachel Feinsig]

That's right. Both kind of in various stages of putting those rules into effect. So in California already, those at large employers making less than $49,920 and those at small employers making less than $45,760 are already eligible for overtime. And by 2023, that level pushed up to $62,400. In New York, it varies depending on where you are in the state as well as what type of employer you. They'll be going up to around 58,500. They're phasing that in the next few years. And some folks are already at that level.

[J.R. Whalen]

And these rules are coming into effect when we are in a very, almost a historic tight labor market.

[Rachel Feinsig]

You know, talking to employers, you know, some of them told me, like, we're already having to deal with this. We're already having to pay more to get people. So these rules aren't the huge shock that they may have been, you know, a decade ago.

[J.R. Whalen]

Some states have run into some blowback from companies, though. Washington state is one of them.

[Rachel Feinsig]

Yeah, a lot of employers do not like these rules. You know, they fought these in the Obama era as well. You know, they worry about mounting costs. They also say it's just hard to keep track of how much people are working. Like, we're all working at night on our cell phones. Every time you log into work email, that does count as work time. So how do we take that into account when determining how much overtime pay people are owed?

[J.R. Whalen]

I guess it's we live in an era where it's not just people in an office from 9 to 5, whether they're part time or full time. In a gig economy, you could be driving in your car, you could be shopping in a store, and that's really part of your work hours.

[Rachel Feinsig]

It's just that everyone is able to kind of work at all times. So before, if it was just you punch in, you punch out, I see how many hours over 40 that you were in my store and I know that I need to pay you overtime. Now, like I said, if you're doing 15 minutes of work at home, does that count? And how do companies keep tabs on that?

[J.R. Whalen]

All right, that's Wall Street Journal reporter Rachel Feinsig on the line with us. Rachel, thanks for coming on the show.

[Rachel Feinsig]

Thanks so much for having me.

[J.R. Whalen]

And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Representative]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See, banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Representative]

they need while increasing mega store profits. They deserve it, don't they?

[Consumer Advocate]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.