President Obama on Monday announced plans to bring overtime pay protections to 5 million more Americans within the next year.
Current regulations allow for employees earning a salary of $23,660 or more to be disqualified from overtime pay — considered "exempt" — if their job duties meet certain requirements. In his announcement on the Huffington Post, Obama said he plans to raise that benchmark to about $50,400 a year, qualifying millions more for overtime pay.
Since the currently regulation is a Department of Labor rule, Obama does not need Congressional approval to make the change.
Obama, who plans to discuss the policy change while in Wisconsin this week, said the current regulation — meant to exempt high-paid, white-collar workers — actually hurts the middle class.
"We've got to keep making sure hard work is rewarded," he wrote. "Right now, too many Americans are working long days for less pay than they deserve."
The president described the plan as part of his longstanding commitment that every American get a "fair shot."
"That's good for workers who want fair pay, and it's good for business owners who are already paying their employees what they deserve -- since those who are doing right by their employees are undercut by competitors who aren't," Obama wrote.
The National Retail Federation has already voiced its opposition to expanding overtime regulations to store managers and assistant managers, suggesting it could increase payroll costs and lead to fewer full-time workers. The federation has also noted that most managers it has polled oppose the proposed changes, fearing they may hinder their ability to multitask between supervisory roles and other duties.
"The retail industry is concerned because the expected change in wage levels could bring many store managers or assistant managers under overtime rules, taking away their ability to use their own discretion in deciding whether to put in the extra hours sometimes needed to do their jobs," the federation has said.
The National Association of Manufacturers added on Tuesday that the change would not be a raise for 5 million people, but rather a demotion.
"Manufacturers are proud of the modern workplaces and high salaries they offer their workforce, and this proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation," said Joe Trauger, vice president of human resources policy with NAM.
The Chamber of Commerce said in a statement the move would hurt small businesses as well as reclassifed employees, who could lose benefits, flexibility, and opportunities for advancement.
"This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact," said Randy Johnson, a senior vice president with the chamber.
Joe Trauger, vice president of the human resources policy for the National Association of Manufacturers (NAM), issued the following statement in response to the Department of Labor’s proposed rule to change overtime regulations:
“Today, the Department of Labor announced the demotion of at least 5 million Americans. Manufacturers are proud of the modern workplaces and high salaries they offer their workforce, and this proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation. We will continue to pursue policies that allow manufacturers to create high-paying, good jobs and vigorously oppose policies that are counterproductive to achieving that goal.”
Democratic legislators have for months called for raising the overtime threshold, pointing out in a letter to the president that only 11% of salaried workers qualify for overtime. In 1975, 65% of salaried workers qualified for overtime pay.
"With many Americans feeling that they are working harder without seeing the rewards, this updated rule will undoubtedly change that and expand opportunity for millions," said Rep. Mark Takano, who signed the letter in January with 31 other Democrats. "I look forward to reviewing the rule and seeing it make its way through the rule-making process as quickly as possible."