Obama to order changes in rules for overtime pay

Share with others:


Print Email Read Later

WASHINGTON -- Bypassing Congress, President Barack Obama intends to order changes in overtime rules, so employers would be required to pay millions more workers for the extra time they put in on the job.

The rules, which would likely not take effect until next year, are aimed at workers now designated as supervisory employees, but who are exempt from overtime because they get paid a salary of more than $455 a week. Mr. Obama plans to order his Labor Department to recommend regulations that would increase that salary threshold and change the definition of what constitutes a supervisor.

Mr. Obama's attention to overtime dovetails with his emphasis on correcting wage disparities, a theme he has said will be central to the rest of his presidential term. It also serves his political ends during a midterm election year, giving him a populist issue along with his calls for a higher minimum wage and better pay for women.

The president's directive, to be announced today, leaves details of a proposed rule to the Labor Department, which is not expected to come up with a recommendation before the fall. Still, it drew swift protests from Republicans who complained that Mr. Obama was sidestepping Congress, and from the business community, which said such rules would increase burdens on employers.

"How does he expect us to work with him?" complained Sen. John McCain, R-Ariz. "It's just a poisonous relationship."

The salary limit separating those who get overtime and those who don't was increased to $455 in 2004, during the George W. Bush administration. At that time, it hadn't been increased since the mid-1970s.

"What we know right now is the threshold has been eroded by inflation, and there are 3.1 million people who, if the threshold had kept up just with inflation, would automatically be covered by overtime provisions," said Betsey Stevenson, a member of Mr. Obama's Council of Economic Advisers.

Overtime and minimum wage rules are set by law in the Fair Labor Standards Act that Congress originally passed in 1938. The law gives the administration some leeway to define the rules through regulations.

The law requires most workers to be paid overtime that is 1.5 times their regular wages if they work more than 40 hours per week. The law allows exemptions for executives, managers and professional workers and sets the salary threshold above which workers don't have to be paid for overtime.

The law also gives employers leeway to define workers as supervisors, and thus ineligible for overtime, even if they spend much of their work day performing non-supervisory work. New rules would likely establish a minimum amount of managerial duties that a worker would have to carry out to be exempt from overtime.

While the White House would not say what threshold it was considering, economists allied with the White House have proposed doubling the current limit to nearly $1,000 a week, or about $52,000 a year, which, when adjusted for inflation, would make it similar to what the threshold was in 1976.

Ross Eisenbrey, vice president of the liberal Economic Policy Institute, said there are about 10 million more workers who would qualify for overtime under that higher threshold. But he said not all of them work overtime, and he estimated that such an increase more than likely actually would affect about 5 million salaried workers.

The current salary limit --equal to $23,660 a year -- is below the poverty level for a family of four. "It's so far from being an executive salary as to be a joke," Mr. Eisenbrey said.

Business groups said any forced increase in wages has consequences that could affect employment, prices and the survival of certain companies which, they said, already must comply with requirements of the new health care law. "Similar to minimum wage, these changes in overtime rules will fall most harshly on small and medium-sized businesses, who are already trying to figure out the impact of Obamacare on them," said Marc Freedman, executive director of Labor Law Policy for the U.S. Chamber of Commerce.

AFL-CIO president Richard Trumka said Wall Street executives benefited from a 15 percent increase in bonuses last year. "Americans are fed up with Wall Street," he said.


Join the conversation:

Commenting policy | How to report abuse
To report inappropriate comments, abuse and/or repeat offenders, please send an email to socialmedia@post-gazette.com and include a link to the article and a copy of the comment. Your report will be reviewed in a timely manner. Thank you.
Commenting policy | How to report abuse

Advertisement
Advertisement
Advertisement

You have 2 remaining free articles this month

Try unlimited digital access

If you are an existing subscriber,
link your account for free access. Start here

You’ve reached the limit of free articles this month.

To continue unlimited reading

If you are an existing subscriber,
link your account for free access. Start here