Overtime Pay Poised For Expansion
In another indication that the Obama administration is unwilling to be stymied by Congressional Republicans, President Obama announced recently that he would ask the Department of Labor to issue new rules regarding overtime pay. The goal of the new measures is to ensure that employees who spend extra hours at work are compensated fairly for their time.
As it currently stands, federal labor law requires that employers pay overtime to most hourly workers. The rules say that any hourly employee who works more than 40 hours per week is required to be paid time-and-a-half. The problem is that many salaried workers are not given overtime pay, something that can be especially difficult for those stuck in relatively low pay positions. Current rules say that only salaried workers who earn less than $455 a week must be paid overtime wages.
This $455 a week works out to a yearly income of only $23,660, less than the federal poverty level for a family of four. This relatively meager income threshold has not been raised in over 10 years, when President Bush took the bold stop of increasing it from $250 per week. Had the rate kept up with inflation it would be at $553 per week today.
According to officials with the Obama administration, it is high time for the threshold to be raised. As it stands now, shift managers at fast food chains or retail managers could be forced to work 50 or 60 hours per week without every receiving overtime. For those whose salary is slightly higher than the current cutoff, it is possible this unpaid overtime could actually result in net pay that is lower than minimum wage.
Though the Obama administration has not yet indicated what level it would like to see the threshold raised to, it has hinted that it intends to make a substantial change. One liberal think tank suggested that the Labor Department raise the threshold to $970 a week or a little over $50,000 a year. Doing this would actually return the level to where it was in 1975, adjusted for inflation, and would result in increased wages for more than 10 million salaried employees.
The federal government is already far behind some states, including California and New York, which already have higher thresholds. In both states, employers must pay overtime to all salaried workers earning $600 a week or less. In the next few years, New York says its threshold will rise to $675 a week while California has already passed legislation raising its threshold to $800 per week.
Though the move won’t happen quickly, advocates for the change say that a decision could prove beneficial to millions of families across the country. Those working long hours with relatively little pay could benefit immensely from overtime wages. Just how high the threshold is raised to will be carefully watched by many.
Source: “Obama Wants to Expand Overtime Pay,” by Chris Isidore, published at Money.CNN.com.
Source: “Obama Orders Overtime Rule Changes,” by David Jackson, published at USAToday.com on March 14, 2014.