Obama Could Boost Wages for Millions Through Overtime Eligibility
“It may even be bigger than increasing the minimum wage,” union official said.
— -- The Obama administration is poised to give potentially millions of low and middle-income American workers a raise.
ABC News has confirmed that a Labor Department proposal to increase the federal threshold under which employers are required to pay overtime to salaried employees is under review by the Office of Management and Budget. It could be unveiled in the coming days. Such a step would not require any congressional approval.
Some economists and labor advocates say the move would be one of the boldest government actions to boost workers' wages in years.
“It may even be bigger than increasing the minimum wage,” Bill Samuels, legislative director for the AFL-CIO, told ABC News. “Of course, the minimum wage is something the administration can’t do by itself ... but this is one of the things they can do without Congress.”
Currently, employers are required to pay “time-and-a-half” for each hour of work above 40 hours per week to workers making less than $23,660 per year – a federal threshold that has not been adjusted to keep pace with inflation since the 1970s.
President Obama first directed the Labor Department to look at updating the rules governing overtime pay last year.
The administration has reportedly considered raising that threshold to $51,000, which would account for inflation, though neither the White House nor Labor Department would confirm details of the proposed increase.
Between 5 and 10 million workers could get overtime protections with an increase of the threshold, according to estimates by the Economic Policy Institute. Samuels estimated roughly 6 million would stand to benefit, if approved.
Certain salaried workers making as little as $455 per week are not currently entitled to overtime pay by law. That would change with this move.
Not everyone thinks this is a good idea, including many House Republicans and business groups who say it will raise wage costs and result in fewer jobs.
The House Education and Workforce committee will review federal wage and hour standards during a hearing on Wednesday, with the Republican majority on the panel scrutinizing the “complex, burdensome, and outdated” regulatory system created by the 1970s-era Fair Labor Standards Act, which sets overtime protections.
Among those testifying is a vice president of the fast-food chain White Castle, Jamie Richardson, who opposes the proposed move.
“Such a modification [to the federal overtime rules] would curb a manager’s critical ability to multitask in a busy restaurant setting, undermine customer service, limit training opportunities for team members, diminish morale and force complicated assessments of time spent ‘managing’ in a restaurant setting,” Richardson will say, according to excerpts of his testimony obtained by ABC News.
“[They] would impose immense costs on chain restaurants and would stifle opportunities for career advancement for hourly associates who wish to manage our restaurants,” he will say.
The National Retail Federation and National Council of Chain Restaurants estimate a change to the overtime salary threshold would cost businesses more than $5 billion.
News of the pending Labor Department action was first reported by Politico.
ABC News' Devin Dwyer and Ali Weinberg contributed to this report.