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Boosting Overtime – Obama Calls for Broader Coverage

On Monday evening, President Obama released an overview of his proposed changes to overtime rules. The proposal would extend overtime rules to cover as many as 5 million currently exempt employees. These workers would benefit from rules requiring businesses to pay eligible employees 1.5 times their regular pay for any work beyond 40 hours a week.

“We’ve got to keep making sure hard work is rewarded,” President Barack Obama wrote in an op-ed published Monday in The Huffington Post. “That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay.”

Per Ed Orlet, NAED’s Vice President of Government Affairs:

According to the federal agency filing the proposal, the US Department of Labor’s Wage and Hour Division, the proposal would:

  • Raise the threshold under which most salaried employees are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried employees. As proposed, this would raise the salary threshold from $455 a week ($23,660 a year) – to a projected level of $970 a week ($50,440 a year) in 2016.
  • Automatically update the salary threshold based on inflation or wage growth over time.
    (Source: http://www.dol.gov/whd/overtime/NPRM2015/)

In this press release, DOL makes no specific reference to changes in the duties test, though we anticipate the actual proposed regulations will include such changes. Despite this notice, the Notice of Proposed Rulemaking (NOPR) has not yet been published in the Federal Register, so the full scope of the proposal is difficult to gauge. NAED members are encouraged to stay tuned for more details as they become available. We will continue to participate in and to support the efforts of the Partnership to Protect Workplace Opportunity, which is the top coalition of business groups working to coordinate efforts to make sure any regulations regarding overtime keep businesses competitive and allow companies to offer advancement and financial incentives to their best employees.

Labor Secretary Tom Perez said Tuesday that the change would add $1.2 billion to $1.3 billion in wages for many newly overtime-eligible workers. Others, Perez said, will benefit from employers reducing their hours. At the same time, he said, some employers may choose to hire new full-time or part-time workers to conduct the work salaried workers had once performed.

Orlet countered that the rules may have unintended consequences that stifle career advancement. “The nature of work is changing,” said Orlet. “and the federal government too often relies on an early twentieth century mindset of so-called ‘worker protection’ that doesn’t make sense anymore. They should be backing away and letting employers and employees have greater flexibility in their working arrangements. We anticipate these proposed rules will do quite the opposite.”

 

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