President Obama Orders Overtime Pay Change

His memorandum directs the Labor Department to change definitions so workers recover OT protections lost to inflation, and it would undo a 2004 change made by President George W. Bush.

The coming battle over executive authority wielded by President Obama has grown more intense March 13, when he directed the U.S. Department of Labor to revise overtime eligibility rules that are set in the Fair Labor Standards Act. The change will "restore overtime protection that workers have lost to inflation since 1975" and will reverse an executive action by President George W. Bush in 2004, the AFL-CIO's Mike Hall reported.

The president has focused increasing attention on income inequality, and he similarly acted to raise the minimum wage for federal contractors this year from $7.25 per hour to $10.10.

A fact sheet posted on the White House website explains the rationale for the changes, saying "millions of salaried workers have been left without the protections of overtime or sometimes even the minimum wage. For example, a convenience store manager or a fast food shift supervisor or an office worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receive a dime of overtime pay. It's even possible for employers to pay workers less than the minimum wage per hour.

DOL in 1975 set the threshold below which white-collar workers were entitled to OT pay at $250 per week, and this was raised in 2004 to $455 -- a sum equivalent to $561 in today's dollars, which is below the poverty line for a worker supporting a family of four, according to the fact sheet. It says only 12 percent of salaried workers fall below the threshold: "Many of the remaining 88 percent of salaried workers are ineligible for these protections because they fall within the white collar exemptions. Many recognize that these regulations are outdated, which is why states like New York and California have set higher salary thresholds."

The president's memorandum directs Secretary of Labor Thomas Perez to update the regulations governing who qualifies for overtime protection by considering how the regulations could be revised to:

  • Update existing protections in keeping with the intention of the Fair Labor Standards Act
  • Address the changing nature of the American workplace
  • Simplify the overtime rules to make them easier for workers and businesses to understand and apply
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