Obama to use executive action to increase overtime pay

Part of president’s ‘year of action’ to battle income inequality, move would raise threshold for exemption from overtime

The president's overtime action could increase the pay of thousands of salaried fast-food workers.
Justin Sullivan/Getty Images

President Barack Obama on Thursday will direct the Labor Department to strengthen overtime pay protections for millions of workers, a White House official said.

The directive, part of Obama's promise to act without Congress using executive actions to get his policy goals through, is meant to help salaried workers, such as fast-food shift supervisors or convenience store managers, who may be expected to work more than 40 hours a week without receiving overtime pay. The proposed change is part of Obama's effort to focus on closing the gap between the wealthy and the poor, which also includes a call to raise the federal minimum wage from $7.25 per hour to $10.10.

The proposal is likely to be met with opposition from some Republicans and members of the business community who say the private sector should have flexibility in setting wages.

Under the new changes Obama is seeking, the Labor Department could raise the pay threshold for workers covered by overtime rules. Currently, salaried workers who make more than $455 per week are exempt from overtime. California and New York have set higher thresholds of $640 and $600 a week respectively, the White House official said.

Republicans were not thrilled with news of the measure.

“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,” House Speaker John Boehner said, according to The Washington Post. “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 move is seen as part of Obama’s pledge to combat income inequality with his “year of action” announced at this year’s State of the Union address.  

While the president has forcefully spoken on the issue in the past, inequality continues to grow to record rates.

Salaried workers’ share of GDP fell to under 43 percent in 2012, the lowest number on record, according to The New York Times.  Meanwhile, Wall Street bonuses grew by 15 percent last year, to $26.7 billion, the highest level since before the world financial crisis in 2008, according to New York State Comptroller Thomas DiNapoli.

It’s not clear how many workers Obama’s overtime change would affect, as there are currently many exemptions to overtime rules. For example, executive, administrative and professional workers don’t have to be paid overtime.

The White House says Obama is authorized to take this action on his own under the Fair Labor Standards Act, which Congress passed in 1938. The proposed changes will be subject to public comment before the Labor Department can start implementing the final rule.

The move was first reported by The New York Times.

Al Jazeera and wire services

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