Obama on Thursday will direct the U.S. Labor Department to look at
overtime regulations and the salary threshold above which employers
are not required to pay overtime for employees deemed to be managers
and supervisors, said the official.
The threshold was last raised in 2004 to $455 per week, less than
half of what it was almost 40 years ago on an inflation-adjusted
Obama's move would bypass Congress through use of executive
authority to review the country's overtime rules. It was part of a
series of populist measures he was promoting ahead of the November
midterm elections as Democrats try to appeal to voters and keep
control of the Senate.
The anticipated proposal could have an immediate impact on the
retail and fast-food industries, possibly making salaried restaurant
managers and store supervisors eligible for overtime pay unless
their salaries go up or their hours are reduced.
Low-level supervisors in healthcare facilities, such as hospital
clerks and dietary directors, also could become eligible for
overtime wages, experts said.
A salaried employee earning $455 for a workweek of 63 hours or more
makes less than the federal minimum wage.
"The president believes that if you're making $25,000 a year and
you're working 60 hours a week, you should be getting paid for the
extra hours you work," Betsey Stevenson, a member of Obama's Council
of Economic Advisers, told reporters.
California had a higher threshold of $640 per week and was set to
boost that to $800 per week in 2016, while New York's threshold was
at $600 per week and will increase to $675 per week in 2016, the
White House official noted.
PUSHBACK FROM BUSINESS
Business groups were quick to criticize the announcement as a move
that could lead to job or wage losses if employers cut hours or
"If implemented, this would have a significant job-killing effect,"
said the National Retail Federation's David French in a statement.
"We are skeptical of the politics of the proposal and certainly of
The National Retail Federation is a trade association that
represents department stories, grocers, chain restaurants and
Obama and Democratic lawmakers were campaigning to boost the minimum
wage to $10.10 per hour from $7.25, a measure that stands little
chance of passing through Congress. He used an executive order in
February to raise the minimum hourly wage of federal government
contractors to that amount.
The president also had tried to urge Congress to extend unemployment
insurance benefits for people out of work for extended periods.
Obama met with House and Senate lawmakers on Wednesday to discuss
the minimum wage, equal pay, paid family leave and child care, the
White House said. The gender wage gap will be the subject of a June
summit hosted by the president.
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Experts said the president had authority to revise overtime
standards without congressional support. The Fair Labor Standards
Act, the country's wage-and-hour law, gave the U.S. labor secretary
the power to revise and update overtime regulations.
"There is no question that they have the power through rulemaking to
do this," said Ross Eisenbrey, vice president at the liberal-leaning
Economic Policy Institute in Washington, D.C.
Eisenbrey, with his colleague Jared Bernstein, a former economic
adviser to Vice President Joe Biden, urged the White House last year
to consider raising the salary threshold at which certain categories
of so-called managerial employees are no longer eligible for
Eisenbrey said that based on inflation, the 1963 salary threshold
was $998 in 2014 dollars; the 1970 threshold was $1,071 in 2014, and
the 1975 threshold was $984 in 2014 dollars.
"Then we went 29 years without an adjustment," he said in an
Eisenbrey and Bernstein urged the White House to consider raising
the threshold to $984, the inflation-adjusted figure in place under
Republican President Gerald Ford.
If a new overtime rule is proposed, the Labor Department will notify
the public, set public comment period and likely hold a hearing. The
department will review the public comments before issuing a final
Eisenbrey predicted the process could take 12 to 18 months.
Littler Mendelson attorney Tammy McCutchen oversaw the last round of
changes to overtime rules in 2004 during the administration of
Republican President George W. Bush. She said in an interview that
the administration faced "a lot of opposition" but "managed to get
"The most corporations can hope for is to actively engage in the
comment period and contain the worst ideas," McCutchen said.
(Additional reporting by Susan Heavey and Carlyn Kolker in New York;
editing by Kevin Drawbaugh)
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