Obama gives order to 'modernize' overtime pay

President Obama ordered the Labor Department on Thursday to “modernize” regulations to allow millions more workers to be paid overtime.

The regulations being changed govern which types of employees qualify for the “white collar” exemption that allows employers to avoid paying overtime at a time-and-a-half rate. 


White House officials say the administration will look to narrow the classification of which jobs qualify for that exemption, so that fast food and retail managers, for example, would no longer be prevented from earning the additional wages.

The president also hinted that the administration would change rules that forced employers to pay overtime to any employee making less than $455 per week, raising that limit.

Business groups oppose the change and say they were blindsided by the administration’s decision, while Republicans have claimed it is another example of executive overreach.

Obama implicitly tied the fight for overtime pay to a separate battle over the minimum wage, arguing people at the bottom of the economic scale deserved to be paid more for their work.

“If you're working hard, barely making ends meet, you should be paid overtime. Period,” Obama said.

Obama promised the administration would consult with both workers and employers before deciding how to update federal regulations.

“With any kind of change like this, not everybody is going to be happy,” he conceded. “But Americans have spent too long working more and getting less in return.”

Obama did little to illuminate which jobs might become eligible for overtime pay, what the new salary level would be, or when the changes might be enacted.

On Thursday, Betsey Stevenson, a member of the White House Council of Economic Advisers, repeatedly told reporters that the White House's economics team still needed to examine the issue.

“We are going to be studying this problem from a bunch of different angles, but right now we've announced that it's important to modernize the rule but not how we're going to do it or who would be impacted,” she said.

While Republicans have said the rule change will hurt the economy, Stephenson suggested Wednesday that there could actually be an increase in employment as a result of updating the overtime rules, with companies deciding to hire more employees rather than pay existing workers more. Still, Stevenson said the potential employment boost wasn't the “primary focus” of the effort.

“What we're trying to take a look at is how we can make the labor force as fair as possible for all workers and that people get rewarded for a hard day's work with fair wage,” she said.

Obama has called for raising the federal minimum wage to $10.10 per hour. He’s also used executive action to require the $10.10 hourly wage for workers on federal contracts.

“While Congress decides what it's going to do, whether it's going to do anything about this issue — and I hope that it does, and I know Democrats are pushing hard to get minimum wage legislation passed — I'm going to do what I can on my own to raise wages for more hardworking Americans,” Obama said Thursday.

“Today I'm going to use my pen to give more Americans the chance to earn the overtime pay that they deserve,” he added.

Ben Goad contributed.