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Obama wants to expand overtime pay

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NEW YORK (CNNMoney) — President Obama will ask the Labor Department on Thursday to issue tougher rules on overtime, which could lead to extra pay for millions of workers who aren’t currently paid for extra hours of work.

The administration will point out that some convenience store managers, fast food shift supervisors and office workers may be expected to work 50 or 60 hours a week without overtime, and that their hourly pay rate may actually be less than the $7.25 an hour minimum wage.

Currently, most hourly workers must be paid time-and-a-half if they work more than 40 hours a week. Most salaried workers do not need to be paid overtime, unless they earn less than $455 a week.

But that works out to $23,660 a year, which is less than the federal poverty level for a family of four.

The $455 threshold for overtime hasn’t been raised in 10 years, since President Bush upped it from $250 a week. It would be $553 today if it had gone up in line with inflation.

The administration hasn’t said where it wants to set the new threshold to require overtime.

The Economic Policy Institute, a liberal think tank, recently proposed raising it to $970 a week, or $50,440 a year, so that anyone earning less than that must be paid overtime. EPI said that would only return the level to where it was in 1975, adjusted for inflation.

“Far from being an executive salary or a professional salary, [the $455 a week level] makes a joke of the law’s provisions,” said Ross Eisenbrey, vice president of EPI.

California and New York already require companies to pay overtime to anyone earning $600 per week or less. And those thresholds are set to increase to $800 per week in California and $675 per week in New York by 2016.

The move wouldn’t take effect immediately. The Labor Department will have to publish the new rule and take comments from both business and labor groups.

But this is one of the steps the administration is taking on its own to get around opposition by Congressional Republicans to many of Obama’s initiatives.

Earlier this year, Obama ordered federal government contractors to pay workers at least $10.10 an hour. He has also proposed raising the minimum wage to that level over the next three years, but efforts to do that have not advanced in Congress.

Many business groups have opposed the push for a higher minimum wage, and the overtime rule changes could also bring opposition from small business groups as well.

–CNN’s Kevin Liptak contributed to this report.


  • airjackie

    As Republican/Tea Party lawmakers have said Americans don’t want health care or any increase in wages and now people don’t want the overtime bill. Companies have always denied overtime pay over 60 years in two weeks pay. Americans would rather go without health care and wages are just fine. Rep. Cantor had the policy that Americans want and don’t want pay for any overtime but allow the boss to decide when an employee can use the time. As Speaker Boehner has told Obama voters put the GOP in the majority to assure cuts in all Federal programs, give more to special interest and finally give the Banks their second bailout. With luck the Koch Bros will buy enough elections to control the US as they control the lawmakers they control now.

    • Manalishi.

      Obozo Failed airwackie. You supported the bankrupting of this country and stealing the financial future of the children. It’s not hard to tell who’s on the government dole as its obvious where their $ comes from. Maybe your plastic bobble head messiah could have worked on the economy. Its’ a shame they refuse to teach basics in moonbat school.

  • LaTonya

    Yes we can!

    .. put salaried employees out-of-work at an even faster rate.

    Jimmy Carter is the happiest guy on the planet.The former worst President of all time.Is there one place in the World where we are better off than we were before the Clinton/Obama “Soft Power” non-offensive?

  • athynz

    As much as I hate to admit it I’m actually agreeing with Obama on this one. Think about it – salaried employees get royally screwed..While the hourly employees get OT pay for anything over 40 a week the salaried employee is put to work 60+ hours a week with no OT. Sure they get a higher base pay but let’s do the math.

    Let’s say there is a $10/hr hourly employee working a standard 40 hour work week – that’s $400/wk and $20,800/yr pretax. Lets say his boss is salaried making $40,000/yr pretax (roughly twice as much as the hourly employee and has more responsibility to go with the pay) and works 60 hours a week. That translates into 12.82/hr. Let’s give an additional 20 hours/wk to the hourly employee – put our hypothetical employee on his manager’s schedule. Time and a half after 40 hours for the hourly employee is $15.00/hr or an extra $300/wk, 15,600/yr for a grand total of $36,400. Sure that hourly employee still makes less but not by much. And that salaried employee loses out on $13,332/yr of overtime he should have been getting.

    Personally I believe that the concept of a salaried employee should be eliminated altogether as it is a huge ripoff. And yes I know salaried employees who have been given the choice between working an additional 20 hours a week or being let go from their jobs.

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