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Obama signs presidential memorandum to expand overtime pay eligibility

President Barack Obama expanded his economic opportunity program on Thursday, March 13, 2014 by signing a presidential memorandum at the White House East Room aimed at changing the regulations to expand the minimum eligibility for overtime pay under the "white collar exemption." The initiative is closely linked to the president's efforts to raise the minimum wage and ensure Americans workers receive the wages they deserve. The president surrounded by workers who would benefit from receiving overtime pay for their work, argued that "It's just fair. It's just the right thing to do."

President Barack Obama signs a presidential memorandum ordering the Department of Labor to revise the regulations for overtime pay, March 2014; Obama also delivered remarks about extending the eligibility threshold for workers to receive overtime pay
Official White House Photo by Lawrence Jackson

President Obama delivered some remarks prior to signing the presidential memorandum where he focused first on the big picture of his economic opportunity program, promising "in this year of action, while Congress decides what it's going to do…. I'm going to do what I can on my own to raise wages for more hardworking Americans."

In his remarks the president again described that the economic opportunity program has four parts, creating good paying jobs, technical job training programs, education initiatives from Pre-K to college, and "making sure that our economy rewards the hard work of every American." 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 as the president expressed "give more Americans a chance to succeed."

The president also made another push urging Congress to raise the minimum wage, recounting; "I've now called on Congress to give America a raise by raising the minimum wage to $10.10 an hour." President Obama wants to lift the wage up from $7.25 to $10.10 for all American workers by 2016. Obama has renewed advocating raising the minimum wage in his State of the Union address, and then followed through by raising the minimum wage for federal contractors through an executive order on Wednesday afternoon, Feb. 12.

The president has been highlighting and visiting businesses that have already raised the minimum raise threshold to $10 or over, including Costco and the Gap. On Tuesday afternoon, March 11, 2014 while in New York City for two Democratic fundraising events, Obama made an impromptu stop at the GAP in Midtown to buy some tops for First Lady Michelle Obama and his two daughters, Malia, 15 and Sasha, 12 all the while praising the Gap for their self-imposed $10 minimum wage. The president brought up that visit in his remarks; "part of what I wanted to highlight was the fact that, on its own, The Gap decided to give a raise to 64,000 employees across the country."

The rest of Obama's remarks were reserved for the expanding overtime pay for Americans, in total 10 million 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 explained; "Overtime is a pretty simple idea: If you have to work more, you should get paid more…. Unfortunately, today, millions of Americans aren't getting the extra pay they deserve. That's because an exception that was originally meant for high-paid, white-collar employees now covers workers earning as little as $23,660 a year."

In keeping with his promise for a year of economic action using executive orders to act where Congress fails to do, Obama announced his latest executive action; "Today I'm going to use my pen to give more Americans the chance to earn the overtime pay that they deserve…. So today, I'm taking action to help give more workers that chance. "

President Obama argues the concept should be simple, hard working Americans should be paid what they deserve, stating; "If you're working hard, you're barely making ends meet, you should be paid overtime, period, because working Americans have struggled through stagnant wages for too long. Every day I get letters from folks who just feel like they're treading water. No matter how hard they're working -- they're putting in long hours, they're working harder and harder just to get by."

The presidential memorandum Obama signed directs the Department of Labor and Secretary Tom Perez to review and change the current overtime rules to ensure more workers would be eligible for overtime pay and "that workers are paid fairly for a hard day's work." As the president stated; "They just want to get ahead. So today I'm taking action to help give more workers that chance. I'm directing Tom Perez, my secretary of labor, to restore the common-sense principle behind overtime. If you go above and beyond to help your employer and your economy succeed, then you should share a little bit in that success."

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; however the Department of Labor 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.

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."

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. The current rules were revised by Obama's predecessor George W. Bush capping the weekly pay threshold to be eligible for overtime as $455 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.

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." As the president pointed out; "If you're making $23,000, typically you're not high-end management. It actually makes it possible for salaried workers to be paid less than the minimum wage." Obama wants the new weekly pay for an overtime cap to be "between $550 and $970 a week."

Obama concluded; "And we're going to do this the right way -- we're going to consult with both workers and businesses as we update our overtime rules. We're going to work to simplify the system to it's easier for employers and employees alike…. So wherever and whenever I can make sure that our economy rewards hard work and responsibility, that it makes sure that it's treating fairly the workers who are out there building this economy every day, that's what I'm going to do." The changes will take over a year to institute.

A new NBC News/Wall Street Journal poll released on Wednesday, March 12, 2014 asked about some of the key issues for the midterm elections determined 58 percent support "raising the federal minimum wage." The new Bloomberg poll also released March 12, 2014 affirms raising the minimum wage is popular with both Democrats and Republicans, at 69 percent with 45 percent of Republicans supporting a raise. However respondents oppose the Congressional Budget Office and GOP leadership argument that a minimum wage would lead to a loss of jobs with 57 percent finding it "unacceptable."

President Obama and the Democrats have decided to champion economic opportunity, including raising the minimum wage as part their midterm election campaign, especially since the Republicans in Congress are opposed these measures. The president's budget for fiscal year 2015 unveiled earlier in the month focused on these economic issues that are important to Democrats.

Republicans, the U.S. Chamber of Commerce and businesses have been arguing as with raising the minimum that expanding the pay eligibility for overtime would cause businesses to cuts jobs. Speaker of the House John Boehner, R-OH is equally against expanding the eligibility for overtime pay as he is to raising the minimum wage. Boehner issued a statement in response to the president's initiative; "The president's policies are making it difficult for employers to expand employment. And until the president's policies get out of the way, employers are going to continue to sit on their hands."


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.

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