By Udochi Onwubiko

Republicans’ newly enacted tax bill allows certain workers to deduct overtime pay from their federal income tax for the next few years. As experts have noted, this policy raises economic fairness concerns, including for workers who cannot work overtime because of caregiving responsibilities. Mandal, A. (2025, April 10). No tax on tips and overtime proposals gain steam across states, but remain a bad idea. Retrieved 30 June 2025, from Tax Foundation website: https://taxfoundation.org/blog/state-overtime-tax-no-tax-on-tips-proposals/

But this provision also highlights deep contradictions in how they want to treat overtime-eligible workers. While loudly touting “no tax on overtime,” the Trump administration has begun rulemaking and congressional Republicans have begun the legislative process on policies that would rollback overtime protectionsEarlier this year, House Republicans held hearings on proposals that would roll back wage and hour protections, a key step in advancing bills through the legislative process. The Future of Wage Laws: Assessing the FLSA’s Effectiveness, Challenges, and Opportunities: Hearing Before the Subcommittee on Workforce Protections of the House Committee on Education and Workforce, 119th Cong. (2025); Project 2025’s labor chapter also lays out several proposals that would take away workers’ overtime; the author of this chapter is expected to take a leadership role at the Labor Department. Berry, J. (2023). Department of Labor and related agencies. In Dans, P., Groves, S. (Eds.) Mandate for leadership: The conservative promise (pp. 587, 589–592). Retrieved 30 June 2025, from https://www.documentcloud.org/documents/24088042-project-2025s-mandate-for-leadership-the-conservative-promise; The White House. (2025, April 1). Nominations sent to the Senate. Retrieved 30 June 2025, from https://www.whitehouse.gov/presidential-actions/2025/04/nominations-sent-to-the-senate-8f2a/ for the nearly 98 million workers who are eligible for it.Budget Lab. (2024, September 17). “No Tax on Overtime” raises questions about policy design, equity, and tax avoidance. Retrieved 30 June 2025, from https://budgetlab.yale.edu/news/240917/no-tax-overtime-raises-questions-about-policy-design-equity-and-tax-avoidance Policies vary from somewhat straightforward to quite technical, but the effect is the same: more work and less pay.

Five Ways Republicans Want to Take Away Your Overtime Pay

1. Eliminating the 40-hour workweek.

For more than eight decades, the 40-hour workweek has served as the cornerstone of workplace rights in this country.The FLSA phased in the 40-hour workweek, with overtime required for hours worked over 44 in a workweek in the first year of the act, 42 hours for the second year of the Act, and 40 thereafter. Fair Labor Standards Act of 1938, Public Law 75-718, 52 Stat. 1060 (1938) (current version at 29 U.S.C. § 201, et seq.). Under the FLSA, if an eligible employee works more than 40 hours in a workweek (seven consecutive days),29 C.F.R. § 778.105. they are owed overtime pay. Overtime must be calculated on a weekly basis; employers cannot average hours over two or more weeks to avoid paying overtime.29 C.F.R. § 778.104.

Republican Proposal : Require employees to work more hours over a longer period – such as two weeks or a month – to earn overtime.

Rather than overtime pay for hours worked beyond 40 in a seven-day workweek, workers would only get overtime pay for working more than 80 hours in a 14-day period or after 160 hours in a 30-day period. This proposal surfaced in a congressional hearing in March and is in Project 2025.Both Project 2025 and witness testimony from a 2025 House hearing on the FLSA propose a 14-day workweek for calculating overtime. Project 2025 proposes using a four-week period to calculate overtime but does not expressly state the number of hours after which overtime pay is due but the author concludes this proposal assumes overtime pay would be required after 160 hours, which is proportional to the current requirement of overtime after 40 hours in a seven-day workweek. Mandate for Leadership, p. 592; The Future Of Wage Laws: Assessing the FLSA’s Effectiveness,Challenges, and Opportunities: Hearing before the Subcommittee on Workforce Protections of the House Committee on Education and Workforce, 119th Cong (2025) (testimony of Tammy McCutchen).

Impact on Workers

Doubling or quadrupling the number of hours an employee must work before overtime applies would take us back a century when employers were able to demand a soul-crushing number of hours from workers without paying overtime. Under this proposal, employers could give a worker 60, 70, or 80 hours one week and provide limited hours in subsequent weeks to avoid paying overtime. This would leave workers with more hours, less pay, and inconsistent schedules from week to week.

Proponents of this proposal argue that it would allow workers to have the “flexibility” to work more hours one week and fewer the next.Berry, J. (2023). Department of Labor and related agencies. In Dans, P., Groves, S. (Eds.) Mandate for leadership: The conservative promise (p. 592). Retrieved 30 June 2025, from https://www.documentcloud.org/documents/24088042-project-2025s-mandate-for-leadership-the-conservative-promise But the law already allows this – employers just have to pay overtime.The FLSA does not require or prohibit varied work hours from week to week. Walsh, D. J. (1999). The FLSA comp time controversy: Fostering flexibility or diminishing worker rights? Berkeley Journal of Employment and Labor Law, 20(1), 74–137. In reality, this proposal would only serve to deprive workers of extra pay for working extra hours.

Here’s an example of how workers would lose out on pay under this proposal:

Sarah works at a clothing store earning $20 an hour. The store where she works anticipates a busy two weeks during the holidays and a steep drop off in business soon after. Her manager sets a schedule that gives Sarah long hours for two weeks and limited hours for the rest of the month.

Under this proposal, her employer would be allowed to use a standard where it only pays overtime for any hours worked over 160 in a month. Compared to current law, Sarah would lose $600 in just one month, even though she is working the same number of hours.

2. Stripping workers of their status – and rights – as employees.

Overtime protections only apply to workers who meet the legal definition of an “employee” under the FLSA.29 U.S.C. § 207(a). Independent contractors who are in business for themselves are not covered under the law.The Supreme Court has recognized that independent contractors are not covered under the FLSA. Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947). In setting the standard for who is an employee under the law, Congress rejected a narrower standard that turned on the degree of control an employer has over an employee.U.S.C. 203(g); Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) Instead, Congress opted for a broad standard to ensure a wide net of workers have basic workplace protections.United States v. Rosenwasser, 323 U.S. 360, 363 n. 3 (1945) (quoting 81 Cong. Rec. 7,657 (1938) (remarks of Sen. Hugo Black)).

Republican Proposal: Narrow the standard used for determining whether a worker is an employee under the FLSA.

In February 2025, House Republicans introduced a bill that would use a narrow standard to determine who is considered an employee under both the FLSA and the National Labor Relations Act, the federal law that governs collective bargaining and unionization rights.H.R. 1319 – To amend the Fair Labor Standards Act of 1938 and the National Labor Relations Act to clarify the standard for determining whether an individual is an employee, and for other purposes. Retrieved June 30, 2025, from https://www.congress.gov/bill/119th-congress/house-bill/1319/text Congressional Republicans held a hearing on the bill in May 2025–a critical step in moving it through the legislative process.

Impact on Workers

Already, millions of workers are improperly classified as independent contractors, rather than employees, depriving them of their right to overtime pay. But workers who are misclassified can still hold their employers accountable and recover their lost wages. For example, in January 2025, the Labor Department recovered $844,000 for home care workers who were misclassified as independent contractors and denied overtime pay.U.S. Department of Labor. (2025, January 16). Department of Labor recovers $844K in back wages, damages for 158 workers illegally deprived of overtime wages by Louisiana home care providers. Retrieved 30 June 2025, from https://www.dol.gov/newsroom/releases/whd/whd20250116-0

But amending the FLSA to narrow the standard for determining a worker’s employee status would make it so fewer workers are entitled to rights at all. This would strip millions of workers of overtime protections; minimum wage, pump time, and unpaid family and medical leave rights would be impacted as well.Fair Labor Standards Act of 1938, 29 U.S.C. §§ 206(a), 218d; Under the Family and Medical Leave Act, the terms ‘‘employ’’, ‘‘employee’’, and ‘‘State’’ have the same meanings given such terms in the Fair Labor Standards Act. 29 U.S.C. § 2611(3).

Stripping workers of their rights under the FLSA, including rights to overtime, could cost workers billions of dollars in pay each year. When the previous Trump Labor Department issued a rule that set out how the agency interprets the law for the cases it investigates using an improperly narrow standard for employment, the Economic Policy Institute estimated it would cost workers $3.7 billion a year.Economic Policy Institute. (2020, July 29). The Trump administration’s proposed independent contractor rule would cost workers at least $3.7 billion annually in lost pay and benefits. Retrieved 30 June 2025, from https://www.epi.org/press/the-trump-administrations-proposed-independent-contractor-rule-would-cost-workers-at-least-3-7-billion-annually-in-lost-pay-and-benefits/

3. Replacing guaranteed overtime pay with a false promise of time off.

In passing the FLSA, Congress recognized that workers and employers are rarely on equal footing.“The legislative history of the Fair Labor Standards Act shows an intent on the part of Congress to protect certain groups of the population from substandard wages and excessive hours which endangered the national health and wellbeing and the free flow of goods in interstate commerce. The statute was a recognition of the fact that, due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce.” Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706–07 (1945). Financially desperate workers, workers with limited job options, and workers who fear retaliation are more likely to accept substandard pay and excessive hours.“The legislative history of the Fair Labor Standards Act shows an intent on the part of Congress to protect certain groups of the population from substandard wages and excessive hours which endangered the national health and wellbeing and the free flow of goods in interstate commerce. The statute was a recognition of the fact that, due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce.” Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706–07 (1945). Given this, the law and its regulations make clear that employers must pay employees the overtime they are owed on time and in full.“The general rule is that overtime compensation earned in a particular workweek must be paid on the regular pay day for the period in which such workweek ends.” 29 C.F.R. § 778.106. Employees do not need to ask to be paid and generally cannot waive or “agree” away their right to overtime pay.U.S. Department of Labor, Wage and Hour Division. (2019, October). Fact Sheet #23: Overtime pay requirements of the FLSA. Retrieved 30 June 2025, from https://www.dol.gov/agencies/whd/fact-sheets/23-flsa-overtime-pay

Republican Proposal: Allow employers to provide time off, to be taken subject to their approval, instead of guaranteed overtime pay.

In March 2025, Republicans re-introduced a bill that would let private sector employers provide – in lieu of overtime pay – 1.5 hours of paid time off (“comp time”) for any hours worked above 40 in a workweek.S. 1158 – Working Families Flexibility Act of 2025. Retrieved June 30, 2025, from https://www.congress.gov/bill/119th-congress/senate-bill/1158/text Under this bill, employees would be allowed to take time off within a “reasonable period” after making a request if using the time off did not “unduly disrupt” the employer’s operations. Workers could request a payout of accumulated comp time in writing. Employers would have 30 days to payout. A version of this bill passed in the House in 2017 during Trump’s first year in office.H.R.1180 – Working Families Flexibility Act of 2017. Retrieved June 30, 2025, from https://www.congress.gov/bill/115th-congress/house-bill/1180

Impact on Workers

Under this bill, workers could see longer hours with no real guarantee of time off. Workers’ request to use earned comp time could be denied–or approval could be rescinded–if an employer thinks it would “unduly disrupt” their business. Inability to use comp time is a common complaint among public sector workers who are eligible for comp time in lieu of overtime pay under current law.Golden, L. (1997, February 1). Family friend or foe? Working time, flexibility, and the Fair Labor Standards Act (Briefing Paper No. 65). Retrieved 30 June 2025 from Economic Policy Institute website: https://files.epi.org/page/-/old/briefingpapers/familyf_bp_1997.pdf; Joyner, C.. (2017, April) What’s Wrong with Comp Time? Ask Government Workers. Retrieved 30 June 2025 from Family Values at Work website: https://familyvaluesatwork.org/whats-wrong-comp-time-ask-government-workers-2

This bill would also make workers ask to receive payment for work they have already performed – and likely make them wait to receive it. Rather than seeing their overtime pay in their next paycheck, employees would have to request time off or a payout. Vulnerable workers, or even higher earning workers who are pushing for a promotion, might feel hesitant to ask for time off. And after a request, workers still may have to wait months to actually take the time off. Workers who want a payout could also see significant delays due to the bill’s 30-day payout deadline and written notice requirement. These delays would amount to employees providing their employers with an interest-free loan.

This example shows how months could go by before workers see their pay:

Because of the potential to delay payment to workers, this bill would also incentivize employers to overwork employees who get comp time and underwork those workers who do not. This could make mandatory overtime hours more common and create economic challenges for workers who depend on overtime pay to make ends meet.

4. Eliminating overtime eligibility for vulnerable workers.

Not all workers are eligible for overtime pay. The FLSA expressly excludes certain groups of workers, including airline workers and most farmworkers.29 U.S.C. § 213(a), (b). But, for some exclusions, the law gives the Secretary of Labor the power to define terms that shape the exclusions. The FLSA exempts certain domestic workers who provide companionship services and gives the Labor Secretary the power to define what “companionship services” means.29 U.S.C. § 213(a)(15) exempts from minimum wage and overtime any employee “employed on a casual basis in domestic service employment to provide babysitting services or any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).”

Republican Proposal: Make more home care workers ineligible for overtime pay.

In 2013, the Labor Department issued a rule that set out new definitions of companionship services, extending overtime and minimum wage protections to nearly 2 million domestic workers.Application of the Fair Labor Standards Act to Domestic Service, 78 Fed. Reg. 60454 (Oct. 1, 2013). The Labor Department has issued a proposed rule to roll back the 2013 rule.Application of the Fair Labor Standards Act to domestic service (Proposed rule). 90 Fed. Reg. 28976 (proposed July 2, 2025) (to be codified at 29 C.F.R. 552).

Impact on Workers

Domestic workers, including home care workers, are among the most vulnerable workers in this country. They lack workplace safety and collective bargaining rights under federal law and are paid extremely low wages.Martinez Hickey, S., & Mast, N. (2025, March). Domestic workers’ pay and working conditions in the South reflect racist, gendered notions of care: Rooted in racism and economic exploitation (Spotlight). Retrieved 30 June 2025, from Economic Policy Institute website: https://www.epi.org/publication/domestic-workers-pay-and-working-conditions-in-the-south-reflect-racist-gendered-notions-of-care-rooted-in-racism-and-economic-exploitation-spotlight/ Stripping these workers – who are overwhelming women – of overtime protections would leave them with even less pay.

5. Changing how overtime pay is calculated.

When an employee works overtime, their employer must calculate how much the employee is owed. Under the FLSA, overtime hours must be paid at 1.5 times a worker’s “regular rate.”29 U.S.C. §207(a)(1). An employee’s regular rate is calculated as an hourly rate, even if the worker is paid on salary or on commission, and is based on what the employee is actually paid for non-overtime hours.29 C.F.R. § 778.109.

This is where it gets technical. In calculating an employee’s regular rate, the law requires employers to include more than just a worker’s hourly wage or salary. Instead, the employer must include all the payments (the law uses “remuneration”) made to an employee, such as certain bonuses or housing that is provided as pay.29 U.S.C. §207(e). But the law includes a specific list of things that employers can exclude from the regular rate, including pay for vacation or reimbursements for business expenses.29 U.S.C. §207(e).

Republican Proposal: Allow employers to only include wages and salary paid to workers and to exclude bonuses and benefits when calculating overtime.Mandate for Leadership, p. 592; Testimony of Tammy McCutchen, pp. 8-9.

Impact on Workers

Excluding benefits and bonuses from overtime calculations would nickel and dime workers out of overtime pay. This change in how overtime is calculated may not always result in large losses for individual workers, but as anyone who has struggled to make ends meet knows, every dollar counts. And because overtime pay calculations are so technical and employers are not required to “show their work” on paystubs, employees could struggle to figure out why they are making just a little bit less each month.

Here is an example of how this could nickel and dime workers out of pay.

Sarah gets paid $20 an hour and is eligible for overtime pay. In a workweek, she worked 50 hours and earned a $150 production bonus. Under the rollback proposal, she would lose $45 for the week.

Bonus: They Get Worse When Combined

On their own, each of these proposals would leave workers with less time or money. But if combined, these proposals could prove disastrous for workers. For example, allowing employers to only pay overtime after 160 hours in a month and provide paid time off instead of overtime pay could leave workers with less pay and with significant delays in receiving what they have earned.

Combining previous examples where Sarah works significant overtime for the first two weeks of a month and is provided comp time, Sarah would see no pay for two entire weeks and receive $1,200 less in her paychecks for January. If her comp time is denied like the example above and she eventually asks for a payout, she could wait months to get payment for her overtime work from January. When she is finally paid, she would end up with $600 less than under current law.

Instead of Taking Away Overtime, Let’s Boost Wages and Guarantee Time off

At a time when workers are struggling to juggle work and family and to earn enough to get by, it’s baffling that policy leaders would reach for levers that would rob workers of both their time and money. Instead, policymakers should be advancing policies that boost workers’ wages and guarantee them paid time away from work. That means raising the federal minimum wage, strengthening overtime protections, and ensuring all workers have access to paid family and medical leave and paid sick days.

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