President Obama has spent years exploring policies intended to put more money in American workers’ pockets. A minimum-wage increase is, at least for now, out of the question – a Republican Congress won’t consider it – and so the White House has turned its attention to overtime policies.
In his State of the Union address last year, the president made a comment that may have seemed like an obscure goal: “We still need to make sure employees get the overtime they’ve earned.” To that end, Obama unveiled a proposal last summer to change income thresholds for overtime eligibility – that may sound a little dry, but stick with me – and late yesterday, the Labor Department finalized new rules in the area. The Huffington Post described it as “one of the most ambitious economic reforms of the Obama era.”
The administration will accomplish that by raising what’s known as the overtime salary threshold. Nearly all workers earning salaries beneath that threshold are entitled to time-and-a-half pay whenever they work more than 40 hours in a week.The current threshold is just $23,660. The White House will be doubling that number, to $47,476, guaranteeing overtime rights for salaried workers earning less than that. The Labor Department will now update the threshold every three years to make sure it keeps pace with inflation.The White House estimates that the change will bring overtime rights to 4.2 million workers who are currently excluded. It will also clarify eligibility for another 8.9 million workers who may or may not have overtime protections under the current rules, officials said.
“The overtime rule is about making sure middle-class jobs pay middle-class wages,” Labor Secretary Tom Perez told reporters. “Some will see more money in their pockets…. Some will get more time with their family … and everybody will receive clarity on where they stand, so that they can stand up for their rights.”
All of this may seem like an obscure area of employment law, but it’s important. As longtime readers may recall, under the old policy, that $23,660 represents a low income threshold for mandatory overtime – those who make more than that can be classified by employers as “managers” who are exempt from overtime rules. The Obama administration is doubling that threshold.
And before you ask, “How in the world will this idea pass a GOP-led Congress?” remember that this shift is entirely regulatory. Under the Fair Labor Standards Act, the White House can make changes like this without congressional approval.
In other words, Republicans aren’t going to like this new policy, but there’s nothing they can do to stop it. (Unless, that is, they win the White House and Congress, at which point they could undo what Obama has done next year.)
For more details on the change, the White House published a fact sheet and online video last night.