The directive is meant to help salaried workers, such as fast-food shift supervisors or convenience store managers, who may be expected to work more than 40 hours a week without receiving overtime pay. The proposed change is part of Obama’s effort to focus on closing the gap between the wealthy and the poor, which also includes a call to raise the federal minimum wage from $7.25 per hour to $10.10.
The National Retail Federation called the president’s action “politically motivated” and it inevitably will kill – not create – jobs.
“This is not an issue that has been percolating – it has been a matter of settled law for 10 years and seems to be working. We think this is politically motivated,” NRF Senior Vice President David French said. “If implemented, this would have a significant job-killing effect.”
Employers who carefully considered the proper classification of their workforce 10 years ago would have to go through that process all over again, and would again be faced with uncertainty, administrative burdens and costs that are contrary to the goal of job creation, French said.
“At the very minimum, any new regulations on overtime need to go through the full, formal rulemaking process and be thoroughly debated with input from all sides.”
The proposal also is likely to be met with opposition from some Republicans who say the private sector should have flexibility in setting wages.
Under the new changes Obama is seeking, the Labor Department could raise the pay threshold for workers covered by overtime rules. Currently, salaried workers who make more than $455 per week are exempt from overtime.
California and New York have set higher thresholds of $640 and $600 a week respectively, the White House official said.
Obama is expected to announce the proposed regulation changes today. The announcement is part of his self-described “year of action,” a series of economy-focused executive decisions that don’t require congressional approval.
The White House official said Obama is authorized to take this action on this own under the Fair Labors Standards Act, which Congress passed in 1938. The proposed changes will be subject to public comment before the Labor Department can start implementing the final rule.
Journal staff contributed to this report.