30 June 2015

This is a Big F%$#ing Deal

Exempt workers are those who are paid by salary, rather than time, and are not paid anything for overtime.

Basically, they have to have "management" duties, and they have to be paid more than, $23,660.00 a year.

That number has been unchanged since 2004, until today:
Barack Obama has launched a push for salaried workers earning nearly US$1,000 a week to receive overtime pay, with the president declaring that too many Americans are working long hours for less than they deserve.

The long-awaited overtime rule from the US labor department would more than double the threshold at which employers can avoid paying overtime, from $455 a week to $970 a week by 2016. That would mean salaried employees earning less than $50,440 a year would be assured overtime if they worked more than 40 hours per week, up from the current $23,660 a year.

“We’ve got to keep making sure hard work is rewarded,” Obama wrote in an article for the Huffington Post. “That’s how America should do business. In this country a hard day’s work deserves a fair day’s pay.”

To keep up with future inflation and wage growth the proposal would peg the salary threshold at the 40th percentile of income, individuals familiar with the plan said. They requested anonymity in return for discussing the proposal ahead of the official announcement. The president has been scheduled to promote the proposal during a visit on Thursday to La Crosse, Wisconsin.

Obama’s proposal aims to narrow a loophole that the president has long said some employers exploit to avoid paying overtime.

Employees who make above the salary threshold can be denied overtime if they are deemed managers. Some work gruelling schedules at fast food chains and retail stores, but with no overtime eligibility their pay may be lower per hour than many workers they supervise.


Under the current threshold only about 8% of salaried workers are eligible for 150% of their pay rate when they work overtime. The EPI estimates that doubling the salary level would make up to 40% of salaried workers eligible.
It should be noted that the requirement for a pay level in order to be exempt was established under the Ford Administration, when it was set at 1.57 times the median wage ($250 a week) which, if updated for today, turns out to be about $51K/year.

It's not as revolutionary as the US Chamber of Commerce says that it is. It's just basically undoing the damage done by not adjusting this number for inflation.

Also note that Obama chose not to increase the percent of time spent on management duties for exempt status.

It's a good news for at least 5 million workers who are currently paid slave wages, and are ordered to put in free overtime.


Stephen Montsaroff said...

You said something positive about Obama?

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