How Long Have Americans Earned Overtime?

In the United States, workers have been entitled to overtime pay since 1938. That’s when Congress passed the Depression-era Fair Labor Standards Act (FLSA), which capped the standard workweek at 40 hours and guaranteed time-and-a-half pay for hours worked beyond that limit.  

Signing the FLSA into law, President Franklin D. Roosevelt called it “the most far-reaching, far-sighted program for the benefit of workers ever adopted here or in any other country.” 

By the 1970s, more than 65 percent of American workers were eligible for overtime pay, which kept blue-collar wages in step with overall economic output. But after 1975, the eligibility rules in the FLSA weren’t updated for decades, and fewer and fewer workers qualified for overtime pay. Today, only around 15 percent of American workers are eligible for overtime.  

Working conditions in the United States sank to new lows during the Second Industrial Revolution of the late 19th century. Unregulated factories and mills operated around the clock, and both adults and children were expected to work up to 16-hour days for as many as 100 hours a week. Pay, meanwhile, was barely enough to survive.  

“People were basically working until they couldn’t work anymore—until they dropped sometimes,” says Rebecca Dixon, president and CEO of the National Employment Law Project. “For employers, it was cheap to do that, because even if I’m paying you for 100 hours, that’s cheaper than paying you overtime.”  

U.S. labor movements organized strikes for an eight-hour workday, and social reformers fought to end the practice of child labor. A major victory came in 1916 when 400,000 railroad workers threatened to strike and Congress passed the Adamson Act, implementing an 8-hour day for the railroad industry.  

During the Great Depression, FDR made labor reform a priority of his administration. In 1936, he signed the Walsh-Healey Public Contract Act, which set a minimum wage and required overtime pay for all federal contractors. The stage was set to expand those same wage protections to millions more American workers.  

The Fair Labor Standards Act of 1938 imposed sweeping reforms aimed at ending child labor and providing a living wage for workers. For the first time in the U.S., there was a federal minimum wage, and all hours worked beyond 44 (later reduced to 40) a week qualified for overtime pay set at 1.5 times the regular hourly rate. 

The FLSA was designed to accomplish two things: compensate people fairly for their work and create an incentive for employers to hire more employees. The overtime requirement made it expensive to keep the same workers on the job for long hours, so it was cheaper for employers to simply hire more employees and pay them at the standard rate.  

From the start, not all workers were eligible for overtime pay. Overtime pay wasn’t required for anyone who worked in a “bona fide executive, administrative or professional capacity.” That exempted most white-collar jobs (doctors, lawyers, engineers, etc.) and managerial positions.  

“The FLSA was really designed to protect those workers who have less power in the labor market than what we traditionally think of as professionals or managers,” Dixon says.   

Outside of those exempted positions, salaried workers could also earn overtime if their wages were below a certain threshold. Under the original FLSA rules, salaried workers could collect overtime pay if their weekly wages were less than three times the federal minimum wage. That original wage threshold was high enough to cover about two-thirds of salaried workers at the time.  

Although overtime was supposed to protect the most vulnerable workers from exploitation, it still left out large swaths of the workforce. “A lot of these New Deal policies like minimum wage and overtime—and even Social Security and unemployment benefits—didn’t apply to farm labor and domestic work, which was done overwhelmingly by Black workers and other people of color," Dixon says.  

Over the decades, Congress amended and updated the FLSA to extend overtime eligibility to more American workers. In 1966, for example, coverage was extended to public schools, nursing homes and laundries. Farm workers could also collect overtime pay for the first time in 1966 but only at larger agricultural operations. In 1974, domestic workers who didn’t live in clients’ homes or provide “companion” services to the elderly were finally included in the FLSA.

In addition to expanding the reach of overtime protections, Congress also regularly updated the wage threshold to keep up with inflation. As a result of these efforts, nearly two-thirds of all American workers were eligible for overtime pay by the late 1970s.  

Not everyone was thrilled with the expansion of overtime protections. Industry groups fought each update to the FLSA knowing that if wage thresholds increased, more salaried workers would qualify for overtime. The last meaningful update to the FLSA was made in 1975, after which subsequent administrations, including Ronald Reagan's administration, successfully blocked efforts to raise the wage threshold for salaried workers to keep up with inflation.  

“The [wage threshold] needed to be updated every five to nine years to keep pace with inflation, but long periods of time went by, and it wasn’t updated,” Dixon says. “And what you see is more and more workers getting left out as salaries increase with inflation, but the thresholds stay the same.”  

From 1975 to 2004, the wage threshold for salaried workers remained at $155 a week or slightly more than $8,000 a year. In 2004, it was finally raised to $425 a week or $22,100 a year, which was not much higher than the federal poverty level for a family of four at the time.

As a result, the number of American workers eligible for overtime pay dipped as low as 8 percent in the early 2010s. Both Barack Obama's and Joe Biden's administrations tried to raise wage thresholds for overtime pay eligibility, but both times the new rules were challenged by business groups and blocked by federal judges.  

Currently, the federal salary limit for overtime pay is set at $35,568 a year and only 15 percent of American workers are eligible for overtime. Several states have set their own salary limits for overtime that are significantly higher than the federal threshold.