President Barack Obama is expected to release a plan later this week that would boost pay for lower-income workers by making millions qualified for overtime.
The plan, which could affect up to 5 million workers in the United States by next year, would allow these employees to be eligible to get paid one-and-a-half times their regular pay for every hour of overtime they put in beyond their standard 40 hour workweek.
Employers are able to get around paying workers who have the title of being a “manager” overtime as long as the salaried employee makes more than $455 a week, or $23,660 a year.
Sometimes, this causes them to see a lower rate in pay per hour than the employees that they supervise because of the amount of overtime that they put in.
Earning the above-mentioned salary as a manager would still put a family of four in poverty. The threshold for overtime was last updated over a decade ago and has been devalued by inflation.
Obama wrote an op-ed in the Huffington Post that details why regulation of overtime needs to be updated.
“Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years.”
The proposed threshold would more than double the current amount, allowing workers to make $970 a week, or $50,440 a year, and still be eligible for overtime for any work over 40 hours by next year.
The change would add $1.2 billion to $1.3 billion in wages for the many workers who would be eligible for overtime as a result, according to Labor Secretary Thomas Perez. Other employees will see the benefit by getting to work additional hours.
Perez said that some employers may choose to hire more workers to do the work that those on salary have once done, but some Republicans think that a higher threshold for overtime would lead to less opportunities.
Cory Fritz, a spokesman for House Speaker John Boehner, R-Ohio, said that the executive order “will limit opportunities and increase costs,” and criticized Obama for not making the modernization of the threshold to be eligible for overtime a bipartisan effort.
The National Retail Federation issued a statement also speaking out against the reform.
“Most workers would be unlikely to see an increase in take-home pay, the use of part-time workers could increase, and retailers operating in rural states could see a disproportionate impact.”
The overtime rule does not require approval from Congress, while Obama’s goal of raising the minimum wage in the United States does.
Obama will discuss the new plan in greater detail on Thursday in Wisconsin.
[Photo By Chip Somodevilla/Getty Images]