LEWISTON — One little-noticed provision of the minimum wage increase approved by voters last month is that it will expand the number of Maine workers eligible for overtime after they log 40 hours in a week.

During the campaign, nobody paid much attention to the overtime change because officials and businesses thought a proposed federal increase would require an even larger increase. But that proposal is on hold and may never be implemented.

So the change in Maine, which will ultimately affect thousands of workers, suddenly matters.

Under an existing state law, hiking the minimum wage forces up the pay level that employers must meet before they can exempt a worker from overtime pay.

Maine requires that employees who are eligible to be exempt from overtime must get an annual salary that “exceeds 3,000 times the state’s minimum hourly wage” or the federal minimum wage, whichever is higher. If they’re paid less than that, they are entitled to overtime pay for excess hours.

At the moment, that means workers who meet the guidelines for exempt employees have to be paid at least $455 weekly, the equivalent of $23,660 annually. If they earn less, they must be paid overtime after 40 hours in a week.


When the minimum wage rises to $9 an hour Jan. 7, the exempt level automatically rises to $27,000 a year.

Since the minimum wage is slated to rise by $1 an hour for each of the following three years, to $12 per hour in 2020, the overtime exemption level will go up until it reaches $36,000 in three years.

Most of the workers likely to fall within the new guidelines are in the retail, restaurant, tourism and nonprofit sectors, officials said. There are also a fair number of professionals who travel a lot but don’t necessarily earn much.

Julie Rabinowitz, the state Department of Labor’s director of policy, operations and communication, said none of that would have mattered if a federal regulation increasing the overtime exemption level had taken effect Dec. 1 as planned.

She said businesses and her department didn’t think a lot about the overtime aspect of the Maine referendum because everybody thought the more extensive federal rule would already be in place.

The change in Maine, Rabinowitz said, was “totally overshadowed by the federal law” that was in the works since 2015 and promised a dramatic revision of the pay for 4 million white-collar workers across the country who don’t make much money.


A federal district judge in Texas issued a nationwide injunction blocking the new rule on overtime pay. The court isn’t planning to drop the injunction until at least the end of January, when a hearing is scheduled, after President-elect Donald Trump takes office.

The proposed federal rule would require overtime for anyone earning less than $47,476 a year, a move that would have had an immediate impact on 16,000 Mainers, according to the U.S. Department of Labor.

But it is likely the Trump administration will kill it.

Rabinowitz said many state businesses have been gearing up for the federal overtime change.

As a result, she said, “They’ll be totally fine for the state rule” and its much lower standards.

Still, things are up in the air.


Rabinowitz said state labor officials had anticipated asking the Legislature to drop the state rule, given that the federal one would have dwarfed it. Instead, she said, they’re going to wait and “see how it plays out.”

The Department of Labor has said it won’t take enforcement action on the new state overtime level until Jan. 31 to give businesses a chance to make sure they’re complying with the new law. They’re still obligated to pay the higher rate, however.

Salary isn’t the only factor in determining whether a worker is exempt from overtime under federal or state law.

The law lays out an extensive test to determine whether an employee has a sufficient administrative or professional role to be exempt. Many people with high salaries are still eligible for overtime.

Rabinowitz said state labor experts have been advising companies about how to classify workers properly to ensure they are following legal guidelines.

A look at state Department of Labor data shows that increasing the minimum pay for overtime-exempt workers will have some impact right away.


For instance, the state says the average entry-level wage for first-line supervisors in retail stores in the Lewiston-Auburn area is $26,125 annually — a bit below the new bottom-line salary level for a manager to be exempt from overtime.

That might mean a small initial raise for some to keep them exempt, which can often be cheaper than adding overtime payments.

But with the level increasing more than 10 percent annually until 2020, keeping pace will require pay hikes that aren’t so small.

How employers will react isn’t a sure thing. Some may reduce their workforces to hold personnel costs in check.

It’s not only in the retail sector that the overtime change is likely to have an impact.

State labor statistics show that entry-level-wage chefs and head cooks in the Lewiston-Auburn area start off at $30,909 a year, above the 2017 level for overtime exemption but $5,000 below the 2020 level locked in by the law.

Politicians are talking about the possibility of changing the tip credit required under the new law. They’re also discussing whether it’s a good idea to index the minimum wage to the inflation rate after 2020.

There doesn’t appear, though, to be any move to change the overtime rules locked in by the minimum-wage referendum.

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