Obama Will Supposedly Change Rules On Executive Overtime Pay

by William Teach | March 12, 2014 8:44 am

Is this a good thing or a bad thing?

(NY Times[1]) President Obama this week will seek to force American businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials briefed on the announcement.

Right now, those making $455 a week or less as a salaried employee are eligible for overtime pay, per federal regulation. In some states, that salary rate is higher. Try to take Obama out of the equation for a moment

Conservatives criticized Mr. Obama’s impending action. “There’s no such thing as a free lunch,” said Daniel Mitchell, a senior fellow with the Cato Institute, who warned that employers might cut pay or use fewer workers. “If they push through something to make a certain class of workers more expensive, something will happen to adjust.”

That could most certainly happen: the question is, to what degree? Let’s flip it around, though: many companies designate positions as salaried in order to avoid paying OT. George Bush raised the rate to $455 a week in 2004. That’s a salary of $23,600. Not quite what one would think of as a salaried employee. And some of these employees may be working well over 40 hours a week.

White House officials said those rules were sometimes abused by employers in an attempt to avoid paying overtime. The new rules could require that employees perform a minimum percentage of “executive” work before they can be exempted from qualifying for overtime pay.

“Under current rules, it literally means that you can spend 95 percent of the time sweeping floors and stocking shelves, and if you’re responsible for supervising people 5 percent of the time, you can then be considered executive and be exempt,” said Ross Eisenbrey, a vice president of the Economic Policy Institute, a liberal research organization in Washington.

Again, take Obama out of the equation: is this fair to workers? There certainly must be a line between what is fair, what is treating employees with respect, what is not taking advantage of them. I think we can all agree that companies shouldn’t have carte blanche to abuse the employer-employee relationship. One big question revolves around how much of an increase will the new rules require?

Let’s put Obama back in

Mr. Obama’s decision to use his executive authority to change the nation’s overtime rules is likely to be seen as a challenge to Republicans in Congress, who have already blocked most of the president’s economic agenda and have said they intend to fight his proposal to raise the federal minimum wage to $10.10 per hour from $7.25. (snip)

The proposed new regulations would increase the number of people who qualify for overtime and continue Mr. Obama’s fight against what he says is a crisis of economic inequality in the country. Changes to the regulations will be subject to public comment before final approval by the Labor Department, and it is possible that strong opposition could cause Mr. Obama to scale back his proposal. (snip)

The overtime action by Mr. Obama is part of a broader election-year effort by the White House to try to convince voters that Democrats are looking out for the middle class. White House officials hope the focus on lifting workers’ pay will translate into support for Democratic congressional candidates this fall.

And there’s the real reason for this proposed change: making Obama and Democrats look good to voters with a mid-term fast approaching. This is an attempt to further change the subject away from the horrible law known as Obamacare. Strictly politics.

Crossed at Pirate’s Cove[2]. Follow me on Twitter @WilliamTeach[3].