At a campaign rally in Erie, Pennsylvania, on Sunday, Donald Trump said the quiet part out loud (again) and openly admitted that he “hated” paying overtime and would get rid of employees who asked for it.
You know, because of how he loves the working class.
“I know a lot about overtime,” he told the audience. “I hated to give overtime, I hated it. I’d get other — I shouldn’t say this — but I’d get other people in. I wouldn’t pay. I hated it.”
Don’t bother to Google it, because yes, it is obviously illegal to refuse to pay overtime or to replace workers who ask for overtime with workers who won’t or to refuse to pay overtime. Unfortunately, however, he’s hardly alone in doing this. For the last 10 years, overtime violations have accounted for 82 percent of the back wages paid for Fair Labor Standards Act (FLSA) violations.
Trump brought this up in the context of his plan to eliminate taxes on overtime pay, which itself is a relatively half-baked idea that his advisers say he came up with all by himself. He hasn’t specifically said what he means by that, yet, probably because he has no idea what he means by it.
According to the Tax Foundation, depending on what he means by that, it could cost us anywhere from $227 billion to $1.5 trillion in tax revenue over 10 years (and that would be in addition to the $6.1 trillion in tax cuts he has already proposed).
The lack of design specificity creates uncertainty over the ultimate revenue effect. For example, if the proposal exempts overtime compensation from income tax and both sides of the payroll tax, the cost would exceed $1.5 trillion over 10 years. On the other hand, a narrowly tailored proposal that only exempts the 50 percent overtime premium from income tax would reduce revenue by about $227 billion over 10 years on a conventional basis.
Should it apply to payroll taxes, including Social Security and Medicare, this could cause some serious funding problems.
“We will end all taxes on overtime. You know what that means?” Trump asked earlier this month during a campaign stop in Arizona. “That gives people more of an incentive to work. It gives the companies, it’s a lot easier to get the people. […] It would be unbelievable. You’ll get a whole new workforce by doing no taxes on overtime.”
The whole point of overtime is, actually, to discourage employers from making workers work for more than 40 hours a week — both because people shouldn’t have to work that much, and to encourage them to hire more people instead of working a smaller number of employees to death. It’s also a safety issue when it comes to those in professions like nursing or police work. These are not people you want working while tired.
However, if the tax cuts applied to both employer and employee, this could give employers an actual incentive to work employees overtime. They could, for instance, offer a very low hourly rate and a very high overtime rate that they would not have to pay taxes on. (The minimum overtime rate is time-and-a-half, but employers can offer more if they wish)
“You can game the system here pretty easily,” said Rajesh Nayak, a former assistant secretary for policy at the Labor Department. “CEOs can get a base pay and get most of their pay in overtime, then suddenly they don’t have to pay taxes on that.”
Others wondered why an hourly worker should pay less in taxes than a salaried worker with comparable annual pay.
“Workers making the same income ought to be taxed the same way. It’s true whether it’s tips. It’s true whether it’s overtime. As policy, it fails the equity test. And I have no idea what it’s going to cost, but the cost will not be trivial,” said Howard Gleckman, a senior fellow at the Tax Policy Center. “You’re going to want to maximize your overtime pay because it’s tax-free and minimize your regular pay.”
While this is being framed as something to help workers, it’s very clearly a way to allow employers to raise their wages without actually having to pay workers more money.
As of right now, overtime laws apply to those working hourly jobs and those who work salaried jobs that pay under $43,888 a year (the Department of Labor raised the threshold from $35,568 in July of this year). Generally speaking, management is usually exempt from overtime, but the laws change with each administration.
It’s also worth noting that Project 2025 calls for a number of changes to the overtime system, all of which would make the system even more confusing, hurt workers and benefit employers. One would return the threshold to the Trump-era level of $35,568, on the grounds that having it higher “punishes” employers in the South for paying their workers less than employers in the North pay their workers.
“DOL [the Department of Labor] should maintain an overtime threshold that does not punish businesses in lower-cost regions (e.g., the southeast United States),” it says.
All of this aside, this statement should make it clear to American workers that Donald Trump is not their friend.
Nota bene: Donald Trump is a person who thinks it is entirely reasonable to fire people who ask for their overtime pay in favor of those who won’t. He’s made that clear. He is not on the side of the workers, he is on the side of the employers and always will be.
