Overtime pay said to apply to more workers under Obama order

WASHINGTON – Some U.S. workers who are deemed ineligible for overtime compensation under what’s known as the “white-collar exemption” would be able to collect extra pay under revised regulations President Barack Obama plans to order tomorrow, according to a White House official.

Obama is directing the Labor Department to modify overtime rules so millions more people will be eligible for overtime pay for working more than 40 hours a week, said the White House official, who requested anonymity because the plan hasn’t been announced.

Workers now classified as executive, administrative or professional may include managers of fast-food restaurants and convenience stores who could receive overtime pay under the new rules, the official said.

President George W. Bush in 2004 set $455 per week as the threshold for what constitutes a white-collar worker for overtime pay purposes. The White House official didn’t say what the new threshold would be.

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About 10 million workers might benefit from the rule if it applied to people making less than $50,000 a year, the Economic Policy Institute said today. The Washington-based group supports the change. Obama will leave it up to the Labor Department to decide what pay threshold to set, said Ross Eisenbrey, the group’s vice president.

Work changes

“It changes your quality of life when you know you can’t be required to work an extra 20 hours a week without being paid for it,” he said in a phone interview. “It could mean more money in your pocket, and on the other hand it could mean a more relaxed and reasonable life.”

The amount a change would cost employers depends on the threshold, which the institute recommends be about $52,000 a year, and on how employers decide to react, he said. Employers could limit workers to 40-hour work weeks or could pay workers time and a half for hours worked above 40.

The Obama proposal would restrict who can be labeled supervisors and made exempt from the rule, said Eisenbrey, who has talked with White House staff about it.

“The restaurant industry is famous for doing this, for calling people assistant managers,” he said. “Retail establishments do this, convenience stories. But it’s pretty widespread.”

Democratic push

Democrats in 2004, led by presidential candidate John Kerry, who is now secretary of state, criticized the Bush plan saying it would cause more than 6 million workers to lose overtime pay.

While Bush got the change through in regulation, it also met opposition from both houses of Congress. Bush threatened to veto any legislation that would block it.

Obama’s move would mark the latest in a series of executive actions this year from the president, who said in his State of the Union address in January that he plans to use that authority when he can in the face of resistance in Congress. Obama raised the minimum wage for federal contract workers and is lobbying Congress to boost it to $10.10 an hour nationally.

The push for a higher federal minimum wage has become a centerpiece of Obama’s attempt to frame Democratic Party priorities before the November midterm elections that will decide control of the U.S. House and Senate.

Minimum wage

Republicans, including House Speaker John Boehner of Ohio, and business groups say that raising the minimum wage would lead to a reduction in jobs, hurting those it aims to help. A Congressional Budget Office report last month found that raising the rate in three steps as Obama proposes would reduce U.S. jobs by 500,000, or 0.3 percent, while lifting 900,000 people out of poverty.

Business groups today criticized the overtime plan, saying it would be another cost burden on companies.

“The president’s plan to increase overtime pay demonstrates another anti-business policy – coming on the heels of a proposal to increase the minimum wage, increase the minimum tipped wage, rising health-care costs, as well as ever-growing, costly and unwieldy regulations,” Eric Reller, a spokesman for the National Federation of Independent Business, said in an email.

Business impact

The overtime requirement would disproportionately affect smaller businesses, the U.S. Chamber of Commerce said.

“We understand that the administration is looking for ways to put more money in people’s pockets, but the only way to do this is to grow the economy and create more jobs,” Blair Latoff Holmes, a spokeswoman for the chamber, based in Washington, said in an email. “Adding more burdens to employers will not accomplish that goal.”

Sixty-nine percent of Americans, including 45 percent of Republicans, support the president’s call to raise the federal minimum wage to $10.10 over the next three years, according to a Bloomberg National Poll. Twenty-eight percent of poll respondents oppose such action.

While the wage-increase proposal resonates with most Americans, the poll indicates that Republicans are finding persuasive counter-arguments, including the potential loss of jobs.

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