By Heather Gann

UAB employees recently took to Reddit to share their mixed opinions on the possible changeSteve Wood UAB Photo

UAB employees are among the many who may be surprised to find how a recent U.S. Labor Department decision may impact their pay and benefits.

Specifically, any salaried worker earning less than $55,000 a year could soon be swapped to hourly pay under a recently proposed U.S. Department of Labor standard. This represents roughly a $20,000 threshold bump from the current standard of $35,568.

UAB employees recently took to Reddit to share their mixed opinions on the possible change. While some commenters say the possibility of overtime pay could be beneficial, others worry that this will impact their health insurance and vacation days.

Dr. Agnitra Choudhury, an economics professor at Auburn University at Montgomery, said all of the commenters may have a fair point.

“Salaried workers on the low end of earnings distribution will be better off,” he said. “Why? Salaried workforce is not about the hours you put in. It is possible that many salaried workers on the lower end of the earnings distribution work many hours but get paid the same. In essence, they make less per hour if you calculate their earnings and divide it by their hours.”

But this increase in pay may lead to the decrease in benefits some UAB employees are worried about, Choudhury said.

“Salaried workers are more likely to have generous fringe benefits,” he said. “However, all else equal, if workers are receiving overtime, firms may decide to reduce the generosity of benefits, to maintain profits.”

He added that this change could also negatively impact upward mobility for those on the higher end of the pay scale.

“On the higher end of the earnings distribution, I do not think this will be good,” he said. “Salaried workers making above median wages are shooting for that promotion, which does not have to be strongly correlated with hours worked. There are weeks when I work 90 hours and then there are weeks when I work only 10 hours total. These do not affect my earnings. However, the incentives may change for the high earning workers following the policy implementation.”

UAB spokesperson Alicia Rohan said the college was awaiting a final ruling on the updated policy before they took any action. UAB economics professor Ben Meadows said this decision could get held up in court.

“This seems likely to be a legal tennis match incoming,” he said.

The revision, if adopted, would restore overtime pay for 3.6 million salaried workers nationwide who are currently making less than $1,059 per week, according to a recent labor department release. Any employee within this pay range would be required to receive hourly wages.

“For over 80 years, a cornerstone of workers’ rights in this country is the right to a 40-hour workweek, the promise that you get to go home after 40 hours or you get higher pay for each extra hour that you spend laboring away from your loved ones,” said Labor Department Acting Secretary Julie Su in the release. “I’ve heard from workers again and again about working long hours, for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifices.

“Today, the Biden-Harris administration is proposing a rule that would help restore workers’ economic security by giving millions more salaried workers the right to overtime protections if they earn less than $55,000 a year,” she said. “Workers deserve to continue to share in the economic prosperity of Bidenomics.”

In addition to ensuring overtime pay, the release said that the proposed rule would also do the following:

  • Give workers who are not exempt executive, administrative or professional employees valuable time back

“By better identifying which employees are executive, administrative or professional employees who should be overtime exempt, the proposed rule will better ensure that those who are not exempt will gain more time with their families or receive additional compensation when working more than 40 hours a week,” the release said.

  • Prevent a future erosion of overtime protections and ensure greater predictability. “The rule proposes automatically updating the salary threshold every three years to reflect current earnings data,” it reads.
  • Restore overtime protections for U.S. territories.

“From 2004 until 2019, the department’s regulations ensured that for U.S. territories where the federal minimum wage was applicable, so too was the overtime salary threshold,” it reads. “The department’s proposed rule would return to that practice and ensure that workers in the U.S. territories subject to the federal minimum wage have the same overtime protections as other U.S. workers.”

The proposed change has received preliminary approval by the White House budget office and could be officially published by the Department of Labor within the next week, according to the office’s website.

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