Obama to use executive action to expand overtime pay

President Obama plans to use his executive authorities to require American businesses to pay millions of employees overtime pay, as part of a populist election-year push targeting income inequality by the White House.

The president will direct the Labor Department on Thursday to revamp regulations governing which types of employees businesses can classify as “executive or professional,” and thus avoid paying overtime. 

ADVERTISEMENT
“Due to years of neglect, one of the linchpins of the middle class, the overtime rules that establish the 40-hour workweek, have been eroded,” said a White House official. 

“As a result, 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.”

Under current rules, employers must provide overtime to salaried workers making less than $455 per week. 

But under the president’s executive order, some fast food shift supervisors or office workers who had been denied overtime pay would now be eligible. Employees would also be required to perform a minimum percentage of “executive work” to qualify for the so-called white collar exemption, narrowing a loophole that allowed companies to exempt low-level retail managers from overtime pay.

“We need to fix the system so folks working hard are getting compensated fairly,” Cecilia Muñoz, the director of the White House Domestic Policy Council, told The New York Times, which first reported the move. “That’s why we are jump-starting this effort.” 

The proposed regulations will be subject to public comment before they are approved and are likely to see strong opposition from Republican lawmakers and business lobbyists.

In 2004, President George W. Bush’s administration moved to tighten the scope of who was eligible for time-and-a-half premium pay. At the time, conservative business groups argued that the rules were unfairly benefiting some salaried workers who were never supposed to receive overtime protection.

Both Bush and Obama were able to shape the law under regulatory authority provided in the 1938 Fair Labor Standards Act.

Obama’s effort dovetails with a broad White House push to highlight income inequality and depict Republican lawmakers as unwilling to act. Obama has called for raising the federal minimum wage, and moved unilaterally to hike pay to his proposed $10.10 hourly wage for workers on federal contracts. The president has also championed an extension of emergency unemployment benefits.

During a speech to the Democratic National Committee late last month, Obama told supporters that, in the coming election, his party needed to repeatedly depict the contest as a choice between “opportunity for a few, or opportunity for all.”

“They love their kids; they love their communities, but they just keep on offering a theory of the economy that time and again has failed America,” Obama said of Republicans. “They think we should give more tax breaks to those at the top, and invest less in things like education and research.”

A Bloomberg poll released Tuesday suggests that Obama might be gaining some electoral traction with his policy agenda. Nearly seven in 10 back his proposal to raise the minimum wage, and more than half support hiking unemployment benefits. 

But when voters are informed of the potential costs of such action, support erodes. A majority of those surveyed (57 percent) said that it was not worth raising the minimum wage if it means eliminating half a million jobs, as projected by the Congressional Budget Office.

Similarly, a majority of white respondents and those aged 65 and older — among the most likely to vote in midterm elections — say the government should not intervene to shrink the income gap.