A bill pending in the Legislature would add Maine to a handful of states that impose overtime pay on many workers earning middle-class wages.

Salaried and professional workers do not earn overtime after working a standard 40-hour workweek unless they earn less than the annual threshold, which is about $38,000 this year. Under the bill, that salary threshold would increase to more than $57,000 within three years.

Proponents of the bill say raising income standards protects workers from long unpaid overtime. Wage overtime has been in effect for decades, but earnings thresholds have not kept pace with inflation, allowing employers to overwork relatively low-paid workers without pay, they argue.

But a coalition of pro-business and trade groups strongly opposes the bill. Maine’s overtime threshold is already above the federal limit, said Peter Gore, executive vice president of the Maine State Chamber of Commerce. Raising the threshold would force employers to bring salaried workers back to hourly wages, increase business costs and make Maine less competitive, he said.

“Right now, Maine wants to bring new jobs, new opportunities, and new investments to the state,” Gore said. “If we have a completely different salary threshold than the rest of the country, what does that mean for those efforts going forward?”

SPONSOR DESCRIBES “EXPLOITATION”

The bill, LD 607, was approved by the Legislature’s Labor and Housing Committee in a party-line vote last week, with Democrats on the committee backing the measure. A similar proposal failed to win committee support two years ago. The proposal recalls an Obama-era reform for paid overtime that was stalled in court and eventually replaced with a much lower threshold under the Trump administration.

“We must act now to protect workers in Maine who are not being paid for their work,” said Rep. Rachel Talbot Ross, D-Portland, sponsor of the bill. “That’s the heart of the bill – that we honor the number of hours they work with compensation. Otherwise it takes on an ugly form of labor exploitation.

Maine’s paid overtime threshold is $38,250 this year, or 3,000 times the state’s minimum wage. That equates to about $18 an hour, just below the state median wage for hourly workers.

Under the bill, that calculation would increase each year to 4,500% of minimum wage by 2025. By then, workers earning up to $57,375 would be entitled to paid overtime.

Maine is among a handful of states that calculate their salary thresholds above the federal standard of $35,680. The increase in overtime standards would group Maine with eight states that have similar laws, from Pennsylvania, where the threshold is around $40,600, to California, where the threshold for large employers is 62 $400.

“We would be ahead of other states, but we wouldn’t be leading the way,” said James Myall, a policy analyst at the left-leaning Maine Center for Economic Policy.

About 30,500 salaried workers would be newly covered by the wage rule when it hits the maximum threshold, Myall said. About 8,300 of those employees regularly work more than 40 hours a week, he added.

“I don’t think it’s (as being) a big deal” as naysayers claim, Myall said. “It’s a relatively small number of people who are covered by this law.”

LOST OVERTIME HOURS

In the 1970s, federal overtime standards covered more than 60% of wage earners, but that number has shrunk to about 20% of those workers. Upgrading overtime thresholds would help prevent employers from creating nominally “managerial” positions such as assistants or deputy managers who receive relatively low pay but may have to work excessive overtime, Myall said. .

“For a long time, people assumed that if you got salaries, you wouldn’t get overtime,” he said. “Nothing prevents people from keeping the salaries and titles of employees; all they have to do is count their hours and pay them overtime.

Federal labor law requires a three-part standard for an employee exempt from overtime. Workers must be salaried, be paid above the overtime threshold, and hold administrative, professional, or managerial positions, also known as job testing.

“Generally, this includes whether that worker supervises other full-time employees or heads a division or department or has responsibility for hiring and firing other employees,” the Labor Department spokeswoman said. Maine, Jessica Picard.

At a public hearing in March 2021, more than a handful of employers and about two dozen trade associations and pro-business groups testified against the bill and warned of serious consequences. he was adopted.

The companies said employee benefits would have to be reduced to meet the added cost, or that currently salaried employees would have to be converted to hourly workers and lose flexible hours and a steady wage.

DEPARTMENT OR DEPARTMENT?

If passed, the bill would affect between 50 and 100 employees of Spectrum Healthcare Partners, a statewide medical company headquartered in South Portland.

Some of these workers are definitely in supervisory positions, and some are in “primary provider positions” — medical assistants or other people who typically receive a salary instead of an hourly wage, the Spectrum CEO said, David Landry. Most of those employees work 40 to 50 hours a week, he said.

“For us to be sustainable, if we have to pay at these higher levels, we have to reduce other expenses, we have to reduce benefits,” Landry said in an interview. “This puts us at a competitive disadvantage compared to other organizations (national recruiting).”

Jamey Kitchen, chief operating officer of the Maine Course Hospitality Group, said the bill “would kill many (if not all) mid-management salaried jobs, turning them into hourly roles,” in testimony submitted to the Legislature l ‘last year. Changing overtime rules would affect about 35 of the hotel management company’s 400 employees, Kitchen estimated.

“I don’t think they’re doing front-line managers a favor by trying to do this — I think they’re going to do them a disservice,” Kitchen said in an interview.

Over business objections, Democrats on the Labor and Housing Committee voted to approve the bill and send it to the full Legislature for a vote later in the winter.

Committee co-chair Sen. Craig Hickman, D-Winthrop, said standards should be raised and workers should be told of their right to overtime pay.

“If someone works 70 hours a week and doesn’t know if they’re qualified for overtime or not and doesn’t track their hours, they’re underpaid,” Hickman said. “What it really is is wage theft, and it’s labor exploitation in the literal sense.”

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