President Barack Obama on June 30 said the Department of Labor will propose extending overtime pay to nearly 5 million workers.
The White House, in a fact sheet released on June 30, said the proposal would guarantee overtime pay to most salaried workers earning less than an estimated $50,440 next year.
The salary threshold guarantees overtime for most salaried workers who fall below it, but it is eroded by inflation every year and has only been updated once since the 1970s.
The current threshold is $23,660 — $455 per week — which is below the poverty threshold for a family of four and only 8 percent of full-time salaried workers fall below the threshold.
The White House said the president directed the secretary of labor to update regulations relating to who qualifies for overtime pay to again reflect the intent of the Fair Labor Standards Act and to simplify the rules so they’re easier for workers and businesses to understand and apply.
The Labor Department’s proposal involves:
• Raising the threshold under which most salaried workers are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried workers. This would raise the salary threshold from $455 a week to a projected level of $970 a week or $50,440 a year in 2016.
• Extend overtime pay and the minimum wage to nearly 5 million workers within the first year of its implementation, of which 56 percent are women and 53 percent have at least a college degree.
• Provide greater clarity for millions more workers so they — and their employers — can determine more easily if they should be receiving overtime pay.
• Prevent a future erosion of overtime and ensure greater predictability by automatically updating the salary threshold based on inflation or wage growth over time.
The proposal does not include specific regulatory changes to the so-called “duties test” that determines whether salaried workers earning more than the threshold are entitled to an exemption from overtime rules.
Hourly workers would generally continue to receive overtime pay, as they do under current rules.
Consistent with the normal rulemaking process, when the Labor Department’s notice is published, there will be a comment period.
Reaction to the announcement …
U.S. Rep. Mark Pocan, D-Wisconsin, said, “I applaud the president for lifting wages for nearly 5 million hard working Americans. Far too many people these days are working more hours for less pay and struggling to make ends meet. The President’s proposed overtime rule will level playing field for employees — providing them with appropriate compensation for their hard work.”
U.S. Reps. Raúl M. Grijalva and Keith Ellison, co-chairs of the Congressional Progressive Caucus, said in a joint statement, “We applaud President Obama for standing with American families who deserve fair pay for their hard work. People all over the country are working longer hours, but their paychecks continue to come up short. The Progressive Caucus believes that in the richest nation on earth, no one working overtime should worry about making ends meet. This new overtime rule is a powerful step towards that goal, helping nearly 5 million Americans feed their families, pay their rent, or clothe their children. We look forward to working with President Obama to continue putting more money in the pockets of America’s working families.”
Editor’s note: This story will be updated.