Obama to expand overtime eligibility for millions of workers
The Obama administration plans to raise the wages of millions of Americans who work more than 40 hours a week by requiring employers to pay them overtime, report Bloomberg.
Workers who earn as much as $970 a week would have to be paid overtime even if theyre classified as a manager or professional, according to a plan outlined on the Department of Labour website Tuesday. The White House issued a fact sheet Tuesday that said 4.7 million workers nationwide would be affected within the first year.
Many employees now receiving as little as $455 a week, or $23,660 a yearbelow the federal poverty line for a family of fourarent entitled to overtime pay because they are classified as managers.
A hard days work deserves a fair days pay, Obama wrote. Thats at the heart of what it means to be middle class in America.
The regulations would take effect in 2016 and extend overtime pay to 420,000 workers in California, 400,000 in Texas, and 290,000 in New York, according to a state-by-state breakdown from the White House. Workers in retail stores and restaurants are among those most likely to be affected.
Obama has been stymied by Republicans in his attempts to get Congress to raise the federal minimum wage at a time when income inequality is emerging as an issue in the 2016 presidential campaign.
Broad Reach
The new rules, proposed by the Labor Department, would be the broadest action by the administration to bolster middle-and lower-income workers, whose wages have stagnated since the recession. Obama is scheduled to discuss the economy during a trip to La Crosse, Wisconsin, on Thursday.
You would be hard pressed to find a rule change or an executive order that would reach more middle class workers than this one, said Jared Bernstein, a former economic adviser to Vice President Joe Biden who is now a senior fellow at the Center for Budget and Policy Priorities.
The median U.S. household income of $54,600 in April was $1,600 short of the amount at the start of the recession in December 2007, according to inflation-adjusted estimates from Sentier Research.
Business lobbyists, including the National Retail Federation, argue that changing the rules might prompt employers to reconsider their supervisory structures, reducing flexibility for managers to directly serve customers and cutting entry-level management jobs.
The 1938 New Deal-era law establishing the federal 40-hour workweek and requiring overtime for additional hours exempts professional, administrative and executive employees.
Labor Department regulations define those categories, in part, through a minimum salary level. The threshold, eroded by inflation, has only been raised once since 1975, a readjustment in 2004 under President George W. Bush that was criticized as too modest by labor unions and some Democrats.
The overtime cutoff covered 8 per cent of salaried workers last year, compared with 65 per cent in 1975, according to an analysis by Ross Eisenbrey, vice president of the Economic Policy Institute, a research group partly funded by labor unions.
The definition of a manager is ambiguous enough under current regulations that restaurant or retail workers who spend most of their time doing manual labor or serving customers can be deemed executives exempt from overtime, Eisenbrey said.
Management Duties
The administration didnt propose any changes to the regulatory definition of a manager, though the Labor Department also is considering tightening that standard. Under the Bush administrations 2004 rules, exempt executives must supervise at least two employees and management must be their primary duty, though there is no requirement covering the amount of time they spend on management tasks. California state regulations, by contrast, require more than half of an employees time be spent on management duties to be exempt from overtime pay.
