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Mar
2014
14

President Obama Signs Executive Order Delivering Deserved Overtime Pay to Millions

Barack Obama

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Ending a so called “white collar exception,” President Obama this week signed an executive order that will revamp overtime regulations, requiring payment to salaried employees labeled as “executive or professional.”  The move means several million additional workers employed as fast food managers, loan officers, and computer technicians will now be paid overtime under the Fair Labor Standards Act.  

These workers were exempted from overtime pay via executive order from President George Bush in 2004.  The move is part of the Obama Administration’s strategy to combat income inequality, a topic that Democrats plan will run on in the upcoming midterm elections.

Currently, the FLSA requires salaried workers to be paid overtime if they earn less than $455 a week.  The President’s executive order would raise that threshold by an undisclosed amount. Ross Eisenbrey, a vice president of the Economic Policy Institute, explained how the system is currently being exploited to cheat workers out of overtime:

Under current rules, it literally means that you can spend 95 percent of the time sweeping floors and stocking shelves, and if you’re responsible for supervising people 5 percent of the time, you can then be considered executive and be exempt,”

White House officials explained the history of changes to the law to CBS News:

“In 1975, the Department of Labor set the salary threshold below which all white collar workers are covered by overtime protection at $250 per week (the equivalent of $970 in today’s dollars). In 2004, the Bush Administration raised that threshold to where it is today, to $455 per week (the equivalent of $553 in today’s dollars), a level that has eroded even further because of inflation. Some employers classify workers as ‘white collar’ workers, even though the overwhelming majority of their duties are not white collar exempting from these protections.”

This is a major move aimed at bolstering the middle class and restoring labor standards agreed to decades prior.  White House officials told The Hill:

“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.”
The executive order is likely to receive intense criticism and protest from Republicans and business interests who do not want the issue to be something Democrats can exploit come November.  Despite being busy trying to slow a national minimum wage movement, revamped overtime will be a battle business interests are willing to fight tooth and nail. Profits being shared a hair more fairly? We can’t have that!

In reality, the only real side effect is that some companies may increase hiring to avoid paying overtime wages which could reduce an already diminishing unemployment rate.

Below, President Obama signs the order.

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