WASHINGTON — Bypassing Congress, President Barack Obama intends to order changes in overtime rules so employers would be required to pay millions more workers for the extra time they put in on the job.
The rules, which would not likely take effect until 2015, are aimed at workers currently designated as supervisory employees but who are exempt from overtime because they get paid a salary of more than $455 a week.
Obama plans to order his Labor Department to recommend regulations that would increase that salary threshold and change the definition of what constitutes a supervisor.
Obama’s attention to overtime dovetails with his emphasis on correcting wage disparities, a theme that he has said will be central to the remainder of his presidential term. It also serves his political ends during a midterm election year, giving him a populist issue along with his calls for a higher minimum wage and better pay for women.
Details of proposal unclear
The president’s directive, to be announced Thursday, leaves the details of a proposed rule to the Labor Department, which is not expected to come up with a recommendation before the fall. Still, it drew swift protests from Republicans who complained he was sidestepping Congress and from the business community, who said such rules would increase burdens on employers.
“How does he expect us to work with him?” complained Sen. John McCain, R-Ariz. “It’s just a poisonous relationship.”
The salary limit separating those who get overtime and those who don’t was increased to $455 in 2004 during the Bush administration. At the time, it hadn’t been increased since the mid-1970s.
“What we know right now is the threshold has been eroded by inflation, and there are 3.1 million people who, if the threshold had kept up just with inflation, would automatically be covered by overtime provisions,” said Betsey Stevenson, a member of Obama’s Council of Economic Advisers.
Overtime and minimum wage rules are set by law in the Fair Labor Standards Act that Congress originally passed in 1938. The law gives the administration some leeway to define the rules through regulations.
The law requires most workers to be paid overtime that is 1.5 times their regular wages if they work more than 40 hours per week. The law allows exemptions for executives, managers and professional workers and sets the salary threshold above which workers don’t have to get overtime pay. The law also gives employers leeway to define workers as supervisors, and thus ineligible for overtime, even if they spend much of their work day performing non-supervisory work.
New rules would likely establish a minimum amount of managerial duties that a worker would have to carry out to be exempt from overtime.
While the White House would not say what threshold it was considering, economists allied with the White House have proposed doubling the current limit to nearly $1,000 a week, or about $52,000 a year.