They say America needs a raise, and President Obama wants to give them one: more pay for about five million Americans, via a proposed change in federal rules that broadens the standard for who is eligible for overtime pay.
Under the current rules implemented by former President George W. Bush, salaried workers must earn less than $23,660 per year in order to be automatically eligible for overtime pay. Obama on June 30 proposed updating overtime rules so that salaried workers who earn less than roughly $50,400 per year can be eligible for time-and-a-half pay when they work more than 40 hours in a week. Workers who toil under collective bargaining agreements, including those in building trades unions, generally already have overtime pay provisions in their contracts.
"Right now, too many Americans are working long days for less pay than they deserve," President Obama wrote in an op-ed for The Huffington Post. "That's partly because we've failed to update overtime regulations for years."
For now, Obama's proposal is just that, a proposal. It could take months to finalize the rule, following a 60-day public comment period. Business groups like the National Retail Foundation are poised to fight the expansion of overtime rules, saying they will be forced to cut back on workers' hours - or workers. The foundation said that "most workers would be unlikely to see an increase in take-home pay, the use of part-time workers could increase, and retailers operating in rural states could see a disproportionate impact."
Under existing rules, professional personnel and people working in executive and managerial positions are excluded from receiving overtime if they make more than $23,000 a year. But this can include people who work in jobs where they spend most of their time doing things like making sandwiches at Subway but are classified as manager to avoid paying them overtime. The Department of Labor is currently considering new regulations to raise the threshold below which everyone must be paid overtime regardless of job classification.
Ultimately, the Obama Administration can enact the rule through regulation, although the Republican-run Congress can seek to counter it through legislation. In that scenario, Obama retains his veto.
“This new rule will help 100,000 Michigan workers get the overtime pay they deserve,” said Ron Bieber, President of the Michigan AFL-CIO. “Restoring overtime protections and putting more money in working families’ pockets will help boost our entire economy. Since 1975, overtime protections have been gutted by inflation without a significant adjustment. By indexing the threshold for overtime pay to inflation, the new rule will help protect wages from being eroded by rising costs going forward."