The proposal does not include specific regulatory changes to the so-called "duties test" that determines whether salaried workers earning more than the threshold are entitled to an exemption from overtime rules. Hourly workers would generally continue to receive overtime pay, as they do under current rules. Consistent with the normal rulemaking process, when the Department of Labor's Notice of Proposed Rulemaking is published in the coming days, there will be opportunities to submit comments in writing. Only after reviewing and considering all the comments will the Department determine what to include in a final rule next year.
Overtime Pay Has Eroded, Failing Millions of Workers
For much of the 20th century, most Americans enjoyed overtime pay. Since 1938, the Fair Labor Standards Act has required businesses to pay not less than a minimum wage for all hours worked and time-and-a-half for any hours worked in excess of 40 hours per week. These rules apply to most hourly and salaried workers, with exceptions including one for executive, administrative, and professional workers. In 1975, 62 percent of full-time salaried workers, including a majority of college graduates, were eligible for overtime pay.
But today, far fewer workers qualify for overtime pay. The exception for executive, administrative, and professional employees has grown so large that a large majority of salaried workers are denied overtime. The salary threshold, which for most salaried workers determines whether they are guaranteed overtime or not, has been changed only twice in the last 40 years and now covers far fewer workers due to inflation. Today, the salary threshold remains at $23,660 ($455 per week), which is below the poverty threshold for a family of four, and only 8 percent of full-time salaried workers fall below it. Workers above this level may be denied overtime even if they spend only a small share of their time on professional, executive, or administrative activities. For example, a convenience store manager, fast food assistant manager, or office worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receiving a dime of overtime pay. For some of these employees, not receiving overtime pay means that they are not even receiving the minimum wage when all of their hours of overtime are taken into account.
This proposed rule will help promote higher take-home pay and allow workers to better balance their work and family obligations. In so doing, it will help shore up the middle class and provide an easier pathway for those aspiring to share in the standard of living it affords.
Building on Additional Efforts to Grow the Middle Class
Modernizing our outdated overtime rules is just one piece of the President's plan to support America’s workers and grow the middle class. The President believes that all Americans should have the opportunity to succeed in our global economy and all working families should be able to afford the cornerstones of economic security. Middle-out economics has helped to make America stronger over the past six years, with our businesses creating 12.6 million new jobs over 63 straight months of job growth. President Obama is pursuing policies that will ensure a growing economy— one with hard work, higher wages, higher incomes, fairer pay for women, workplace flexibility for parents, affordable health insurance and adequate retirement benefits.
Higher Wages
- President Obama has called on Congress to raise the national minimum wage, and took action by signing an Executive Order to raise the minimum wage to $10.10 for workers on new federal contracts. Since early 2013, when the President first called for a minimum wage increase, 17 states and the District of Columbia have passed increases to their minimum wage, which will benefit about 7 million workers. Many other cities and localities, such as Chicago and Los Angeles, have also passed minimum wage increases, while businesses across the country have taken steps on their own to raise wages for their workers.
Pages: 1 · 2
More Articles
- Women’s Congressional Policy Institute: The House Will Consider H.R. 3226, the Prematurity Research Expansion and Education for Mothers Who Deliver Infants Early (PREEMIE) Reauthorization Act of 2023
- Board of Governors of the Federal Reserve System: Something’s Got to Give by Governor Christopher J. Waller
- February’s Hot Data Releases: Governor Christopher J. Waller, Federal Reserve Board Frames a Few of the Issues Around Inflation and the Economic Outlook
- Remarks by President Biden on American Rescue Plan Investments; September 02, 2022, South Court Auditorium Eisenhower Executive Office Building
- GAO Report On Air Travel and Communicable Diseases: Federal Leadership Needed to Advance Research
- GAO, Unemployment Insurance: Transformation Needed to Address Program Design, Infrastructure, and Integrity Risks
- The US Housing and Mortgage Market, Risks and Resilience: Federal Reserve Governor Michelle W. Bowman
- Federal Reserve Issues A Federal Open Market Committee Statement: Committee Will Aim to Achieve Inflation Moderately Above 2% For Some Time
- Federal Reserve Chairman Jerome Powell: Monetary Policy in the Time of Covid
- Biden-Harris Administration Marks Anniversary of Americans with Disabilities Act and Announces Resources to Support Individuals with Long COVID, Increased Access to Democracy for Voters with Disabilities