President Barack Obama revisited the expanding overtime pay initiative he introduced this past week at the White House in his weekly address released Saturday morning, March 15, 2014. Obama signed a presidential memorandum on Thursday afternoon, March 13, 2013 directing the Department of Labor and Secretary Tom Perez to revise the overtime pay threshold eligibility for "white collar" exemptions.
President Obama reiterated many of the points of his remarks at the memorandum signing in his weekly address entitled "Rewarding Hard Work by Strengthening Overtime Pay Protections" including discussing the current economic recovery, his economic opportunity program taking actions with executive orders and presidential memorandums, and outlining his latest initiative revising the overtime pay rules.
President Obama said he is keeping with his promise for a year of economic action using executive orders to act where Congress fails to do so, stating; "In this year of action, I'm doing everything I can, with or without Congress, to expand opportunity for more Americans." Obama stated he issued a presidential memorandum to review and revise overtime pay regulation; "This week, I ordered a review of our nation's overtime rules, to give more Americans the chance to earn the overtime pay they've worked for."
In addition to outlining the overtime pay initiative the president also mentioned raising the minimum wage a central legislative push to his economic opportunity program and ensuring American workers are getting a "fair wage for a hard day's work."
Although the economy is recovering, it has only been the higher income bracket that have benefited from the economy's turnaround. The president explained; "Our businesses have created 8.7 million new jobs over the past four years…. While those at the top are doing better than ever, average wages have barely budged." Obama recounts that those in the lower and middle-class income brackets are still struggling. "But in many ways, the trends that have battered the middle class for decades have grown even starker…. Too many Americans are working harder than ever just to keep up."
President Obama again stated the central purpose of his economic program; "We've got to build an economy that works for everybody, not just a fortunate few…. So we've got to restore opportunity for all - the idea that with hard work and responsibility, you can get ahead."
President Obama introduced his economic opportunity program during his 2014 State of the Union Address aiming at making the middle class more accessible to low-income Americans and strengthening those already in the middle-class. The president described that for the economy to grow the middle-class has to thrive; "We know from our history that our economy grows best from the middle out, when growth is more widely shared." The program has four parts, creating good paying jobs, technical job training programs, education initiatives from Pre-K to college, and raising the minimum wage.
The White House released a fact sheet that explains that Congress has control of any changes to the Fair Labor Standards Act, which was originally passed in 1938, and governs overtime pay and the minimum wage. Obama explained that the "for more than 75 years, the 40-hour workweek and the overtime protections that come with it have helped countless workers climb the ladder of success."
The Department of Labor, however, controls "white collar" exemptions for "executive, administrative and professional employees" which is the basis of the president's memorandum to bypass Congressional control, and be able to expand overtime pay eligibility.
Overtime rules were instituted in 1975 to ensuring there would be a cap to prevent high paying "white collar workers" from being eligible for overtime. In 1975 the pay cap was $250 or 35 percent of overtime workers.
There are problems however, with the overtime pay rules stemming from revisions during George W. Bush's presidency in 2014 when the weekly pay threshold was capped at $455 to be eligible for overtime or just over $23,000 a year and made those doing managerial, executive, administrative and professional duties exempt from overtime. At that point 82 percent of Americans were exempt from getting paid overtime.
President Obama explained the situation where Americans are working 10 to 30 hours overtime each week and are not being paid for their work although some might not be making much more than the $23,000 a year cap. The president stated; "But today, an overtime exception originally meant for highly-paid employees now applies to workers who earn as little as $23,660 a year. It doesn't matter if you do mostly physical labor, or if you work 50, 60, even 70 hours a week. Your employer may not have to pay you a single extra dime."
This has left millions of Americans working overtime and never getting paid for it, even pushing the hourly rate below the minimum wage. The White House indicated that now 88 percent of workers are excluded from being paid overtime; "time and a half." Obama explains; "In some cases, this rule makes it possible for workers earning a salary to actually be paid less than the minimum wage. And it means that business owners who treat their employees fairly can be undercut by competitors who don't. That's not right."
President Obama again announced that his administration is going to change these rules to be fair; "So we're going to update those overtime rules to restore that basic principle that if you have to work more, you should be able to earn more."
The White House states the memorandum directs the Department of Labor to "Update existing protections in keeping with the intention of the Fair Labor Standards Act; Address the changing nature of the American workplace," and "Simplify the overtime rules to make them easier for both workers and businesses to understand and apply." The Department of Labor will accomplish this as Obama indicated "by consulting workers and businesses, and simplifying the system so it's easier for everyone."
In total 10 million workers will benefit from the president's initiative to change the regulations and increase the eligibility threshold for those working beyond the 40-hour work week. Obama wants the new weekly pay for an overtime cap to be "between $550 and $970 a week."
President Obama concluded with vow to continue do whatever he can to ensure American workers get the fair pay they deserve. Obama declared that "Americans have spent too long working more and getting less in return. So wherever and whenever I can make sure that our economy rewards hard work and responsibility, that's what I'm going to do. Because what every American wants is a paycheck that lets them support their families, know a little economic security, and pass down some hope and optimism to their kids. That's something worth fighting for."
- President Barack Obama's Weekly Address: Rewarding Hard Work by Strengthening Overtime Pay Protections, March 15, 2014 -- Transcript | mp4 | mp3
President Barack Obama's Remarks on Overtime Pay, March 13, 2014
Bonnie K. Goodman is the Editor of the Academic Buzz Network, a series of political, academic & education blogs which includes History Musings: History, News & Politics. She has a BA in History & Art History & a Masters in Library and Information Studies, both from McGill University, and has done graduate work in Jewish history at Concordia University as part of the MA in Judaic Studies program. Her specializations are US, Canadian & Israeli politics.