President Obama Readying Executive Action on Overtime Pay

According to reports, President Obama is planning to soon issue an executive action that would effectively increase the wages of millions of hard working Americans. 

The proposed executive order would implement new rules regarding which workers would qualify for overtime compensation. Currently, corporations are exploiting a loophole in our nation’s labor laws by qualifying workers, many earning incomes well below the poverty line, as managers and thus exempting them from receiving overtime pay for hours worked in excess of 40 hours a week.

“Spending time trying to find loop holes to reduce the pay of your employees is not good for employees,” said Patriotic Millionaires chairman Morris Pearl, “It is also not good for employers who may save in the short term, but are left with a work force demoralized by an employer actively working against them.”

The new rules would increase the minimum salary required for an individual to be considered a manager or executive. While that requirement has not been finalized, officials at the Department of Labor are urging the threshold be as high as $51,000 and a group of over two dozen Democratic senators asked that it be raised as high as $56,680.

Our current overtime regulations stem from a 1938 law that established the federal forty hour workweek and required overtime for additional hours worked over that threshold. However, it also created exemptions for professional, administrative and executive employees. What qualifies an individual as a member of this class of employee is partly based on a minimum salary level. The current salary cutoff to qualify for overtime is $23,660 – a level that only covers 11% of salaried employees. Raising the minimum salary to the $51,000 proposed by the Labor Department is estimated cover an additional 6 million American workers, making around half of America’s salaried employees eligible for overtime pay.

Senator Sherrod Brown (D-OH) praised the proposal stating, “This is absolutely one of the best practical ways to give people the on-ramp to the middle class. When you strip people of their overtime pay, which is what’s happened over the years, they really don’t have a chance to get ahead: They’re working harder and harder and not seeing real pay increases.”

While an exact date for the reveal of this executive order is currently unknown, President Obama promised action “relatively soon” in an interview with the Huffington Post on March 21st.

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