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Walz Misleads on Trump Overtime Pay

2016: Obama raised overtime pay threshold; Trump took no action.

Published August 25, 2024 at 5:04am by

Tim Walz

Statement: Former President Donald Trump “cut overtime benefits for millions of workers.”

Minnesota Gov. Tim Walz told union workers in Los Angeles that a Trump-Vance administration would harm unions and diminish workers’ paychecks.

Former President Donald Trump "cut overtime benefits for millions of workers," Walz said at the Aug. 14 convention of the American Federation of State, County and Municipal Employees.

Walz mischaracterized what happened.

When contacted for comment, the Harris-Walz campaign pointed to news articles showing that former President Barack Obama proposed to extend overtime pay eligibility to more workers, but a judge blocked it in November 2016, just before it was slated to take effect. The Trump administration did not challenge the judge’s ruling and instead set its own overtime rule, which extended overtime pay to millions fewer people than Obama’s rule would have done.

The Obama rule was not in effect at the time Trump took office, so Trump’s administration did not cut an existing benefit.

Overtime rules under Obama, Trump

Most employees are eligible for time-and-a-half pay if they work more than 40 hours a week. But there are exceptions for white-collar workers.

To be considered a white-collar worker by the federal government, an employee has to make more than $455 per week; be paid a salary rather than an hourly wage; and work in an administrative, executive or professional position.

The Obama administration sought to boost the baseline amount salaried white-collar workers could earn and still qualify for overtime. So, in 2016, the administration said it would extend overtime eligibility to white-collar salaried workers earning less than $913 a week, or $47,476 a year. This was about double the exemption level set in 2004 of $455 per week, or $23,660 a year. (Hourly workers were already guaranteed overtime pay regardless of their earnings level).

The change would have extended overtime pay eligibility to 4.2 million additional Americans, the Obama administration said. (Economists generated their own estimates, lower or higher, but still in the millions.)

Republican-led states and business trade groups challenged the rule. A federal court in Texas halted Obama’s rule in November 2016, a week before it was to take effect.

Because the judge threw out the rule, the overtime threshold reverted to $23,660 in annual pay, said Rachel Greszler, a senior research fellow at the conservative Heritage Foundation.

A few months after the judge struck down the Obama rule, Trump took office. Trump’s administration did not defend the Obama-era rule change, dropping the government’s appeal in 2017.

The Trump administration proposed its own rule in 2019, with an earnings cutoff lower than the Obama rule but higher than the status quo.

The Trump Labor Department’s overtime rule became effective Jan. 1, 2020, and raised the overtime pay eligibility to salaried workers earning $35,568 per year. The department estimated that 1.2 million additional workers would be eligible for overtime pay.

Did the Trump changes constitute a cut?

It wasn’t the case that millions of workers previously qualified for overtime pay and then Trump changed that. The Trump administration did not defend the Obama-era legal case.

"By abandoning the 2016 rule and eventually introducing a new one with a significantly lower salary threshold, the Trump administration excluded millions of workers who would have benefited from the 2016 rule’s new or strengthened overtime protections," said Jenn Round, director of Beyond the Bill, a program that advocates for labor standards enforcement at the Rutgers University Workplace Justice Lab.

The president of the Economic Policy Institute, Heidi Shierholz, who served in the Obama administration as chief economist at the Labor Department, wrote in 2019 that the Trump administration’s rule left millions of workers behind.

"At its heart, the Trump administration’s rule is based on the notion that someone making $35,568 a year is a well-paid executive who doesn’t need or deserve overtime protections," Shierholz wrote. Rather than defend the Obama rule, "Trump has sided with the interests of corporate executives over those of working people."

However, the notion that this represents a cut presumes that the courts would have upheld the Obama rule, which was far from a certainty.

"I cannot think of any way in which actions that the Trump administration took could be construed as cutting overtime benefits," Greszler said.

After the judge threw out Obama’s rule, the overtime threshold remained at $23,660, Greszler said. When Trump established a rule that increased the salary threshold to $35,568 "this increased the number of workers subject to overtime rules," Greszler said.

And the skirmish continues: The Biden-Harris administration set a rule, effective July 1, that initially raised the salary threshold for overtime pay to $844 per week, the equivalent of $43,888 annually. The threshold would rise to $58,656 per year on Jan. 1, 2025. There are at least three lawsuits pending against that rule.

PolitiFact's ruling

Walz said Trump "cut overtime benefits for millions of workers."

In 2016, the Obama administration set a rule that would have raised the salary threshold for overtime pay. It said the change would extend overtime pay to 4.2 million more workers. But a judge struck it down before it took effect, and the incoming Trump administration dropped a challenge against the ruling.

The statement has an element of truth because the decision not to continue the judicial appeal process meant the Trump administration gave up on the possibility of providing overtime eligibility to millions more workers compared with the Obama-era rule. But categorizing it as a cut is misleading because it relies on the assumption that Obama’s more expansive rule would have been approved by the courts, which was not a certainty.

Trump’s administration did not take action to cut an existing benefit; the Obama rule was not in effect at the time Trump took office.

We rate this Mostly False.

Our sources

Read more: Fact-check: Tim Walz misleads about Trump on overtime pay