WASHINGTON – The Obama administration, in a far-reaching effort to improve the lot of workers that has ignited criticism from business groups, announced Tuesday that it was making millions more employees eligible for overtime pay.
Under the regulation to be issued by the Labor Department, most salaried workers earning as much as $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. The previous cutoff for overtime pay, set in 2004, was $23,660.
“This is a big deal to be able to help that many working people without Congress having to pass a new law,” said Ross Eisenbrey of the Economic Policy Institute, an early voice in urging the administration to take up the issue. “It’s really restoring rights that people had for decades and lost.”
The change is expected to play out in a variety of ways. Once the rule goes into effect Dec. 1, many workers will receive more pay when they work overtime, but others may end up working fewer hours if employers move to limit their time at work. In other cases, employers may decide to increase the salaries of some workers to push them over the limit so that companies will not have to pay overtime or hire additional workers after limiting hours for existing workers.
Vice President Joe Biden said the rules touched on a core issue for Barack Obama – ensuring that middle-class workers are treated fairly.
“The middle class is getting clobbered,” Biden told reporters. “If you work overtime, you should actually get paid for working overtime.”
“For the past 40 years, overtime protections have been increasingly weakened,” Biden added, noting that more than 60 percent of salaried workers qualified for overtime in 1975 based on their salaries, but only 7 percent do today.
Opponents argued that the measure could cost billions of dollars and would undermine the morale of salaried employees by requiring them to account for every hour of their workdays.
“This is an extreme revision in the white-collar threshold,” said David French of the National Retail Federation. “By executive fiat, the Department of Labor is effectively demoting millions of workers.”
Republican lawmakers, who are close to many of the industries that oppose the new rule, have vowed to block it during a mandated congressional review period.
With Donald Trump as their presumptive presidential nominee, however, the issue is fraught with risk for Republicans. Any attempt to repeal the regulation could exacerbate an already palpable split between Trump’s blue-collar supporters and the party’s establishment donors and politicians.
Paul Porter, a truck driver from Ava, Missouri, who is a member of the Teamsters union and a supporter of Trump, said he already received time and a half after eight hours of work but strongly favored the new overtime regulation.
“I have friends who are managers who get taken advantage of terribly,” he said.
Federal employment law provides two ways for most salaried workers to become eligible for overtime. The first is through a so-called duties test that essentially determines whether they are bona fide executives, administrators or professionals, which has historically meant spending most of their time exercising some decision-making authority. If not, they are supposed to be eligible for overtime pay. That method is open to interpretation.
The second is more of a hard-and-fast standard, setting a salary level to determine eligibility for overtime, regardless of duties. So even for employees who are legitimately managers, if their salary is below the cutoff, they must be paid overtime.
Certain categories of workers, like teachers, doctors and outside sales representatives, continue to be exempt from the regulation, although academics primarily engaged in research are not.