Obama to order expansion of overtime pay

By Zachary A. Goldfarb

President Obama plans to order new overtime protections for “millions of workers,” using his executive authority to revise regulations covering who should be paid extra for working more than 40 hours a week. A White House official said Wednesday that Obama would direct Labor Secretary Thomas Perez “to begin the process of strengthening overtime pay protections for millions of workers to help make sure they are paid a fair wage for a hard day’s work while simplifying the rules for employers and workers alike.”

The official, who spoke on condition of anonymity, said the move reflects the fact that current Labor Department regulations establishing a 40-hour workweek have grown outdated. According to the White House, millions of salaried workers have had to work 50 or 60 hours a week without being paid overtime — and, in some cases, “making barely enough to keep a family out of poverty.”

Asked about Obama’s planned executive order by reporters Wednesday morning, House Speaker John A. Boehner (R-Ohio) rejected suggestions that the issue could become a difficult one for Republicans to ignore in an election year. “There’s all kinds of rumors about what the president may or may not do with regards to overtime pay and reclassifying some jobs for overtime,” he said. “But if you don’t have a job, you don’t qualify for overtime. So what do you get out of it? You get nothing. The president’s policies are making it difficult for employers to expand employment. And until the president’s policies get out of the way, employers are going to continue to sit on their hands.”

The effort has already drawn intense resistance from the business community, which is likely to say that new regulations and higher wages could hurt jobs in a still-recovering economy with a 6.7 percent unemployment rate.

The White House did not say how administration officials plan to overhaul regulations to ensure that workers are better compensated. But administration officials cited their authority to regulate overtime under the 1938 Fair Labor Standards Act. That act requires most workers to be paid overtime but permits exemptions at the discretion of the Labor Department. One prominent exemption permits employers to deny overtime pay to “executive, administrative and professional” workers.

Companies have broad leeway to classify workers as being in this category, even if their job duties are far from what’s generally considered white-collar work. Today, most workers who make more than $455 per week are eligible to be classified as “executive, administrative and professional.” Workers earning less than that must be paid overtime. The George W. Bush administration set the $455 level in 2004, and it has not been adjusted to account for inflation. If inflation were taken into account, the threshold would be $553 per week. The White House official noted that the Labor Department first set the salary threshold in 1975 at $250 per week, which would be $970 in today’s dollars.

One option for the administration would be to hike the federal threshold to somewhere between $550 and $1,000 per week, and perhaps set it to rise automatically with inflation. California and New York already have set state thresholds of $640 per week and $600 per week, respectively, with the caps set to rise to $800 per week and $675 per week in 2016.

The White House official said the action, which was first reported by The New York Times, is part of the administration’s campaign to make progress on important priorities despite political gridlock in Congress. “The central tenet that motivated President Obama to run for office and guides him every day is that, in America, if you work hard and take responsibility, you’ll have the opportunity to succeed,” the official said.

“Today, after weathering the Great Recession, and through five years of hard work and determination, America is creating jobs and rebuilding our economy. But as a result of shifts that have taken hold over more than three decades, too many Americans are working harder than ever just to get by, let alone to get ahead.”