Obama Overtime Policy Change Draws Sharp Reaction

What constitutes a white-collar worker? And should that person get overtime?

That’s the question raised by a recent push by the Obama administration to redefine a rule limiting whether a worker can receive overtime, which would also raise the maximum pay level at which he or she would be eligible.

The move, in the form of an executive memorandum signed by the president on Thursday  (opens in a new tab), starts the ball rolling on the first update to the standard since 2004. The memo directs the U.S. Labor Department to propose rule changes, including an update to the current pay levels, that could take as long as a year to put into effect.

When implemented, the changes could have an immediate impact on those in jobs such as fast-food manager and store supervisor, for example. Considered white-collar workers by the current rules, those employees could see their hours cut or their pay raised as a result of the changes.

Business Groups Blindsided

Ahead of a formal announcement by the White House, a number of business groups expressed disbelief over the proposal, which they said they didn’t see coming and will come at a time when many already are pushing back against a minimum-wage increase.

“This came as a shot out of the blue,” David French, the National Retail Federation’s senior vice president for government relations, told The Hill  (opens in a new tab). “Just on the surface, this looks like an enormous new administrative burden.”

The U.S. Chamber of Commerce, meanwhile, argued the move would not have its intended effect.

“We understand that the administration is looking for ways to put more money in people’s pockets, but the only way to do this is to grow the economy and create more jobs,” Chamber Spokeswoman Blair Latoff Holmes told Bloomberg  (opens in a new tab). “Adding more burdens to employers will not accomplish that goal.”

And two groups focused on small businesses—the National Federation of Independent Business and the National Small Business Association—both argued to Fox Business that  (opens in a new tab), while the plan may focus on larger businesses, the move, in NSBA Spokeswoman Molly Day’s words, “could be very problematic for small firms.”

Liberal Groups Pleased

The idea of policy change was born at a liberal think-tank—the Economic Policy Institute—which noted in research reported by Reuters  (opens in a new tab) that the current salary threshold is less than half of what it was in the 1970s, when adjusted for inflation.

“It changes your quality of life when you know you can’t be required to work an extra 20 hours a week without being paid for it,” Ross Eisenbrey, vice president of the group, told Bloomberg  (opens in a new tab). “It could mean more money in your pocket, and on the other hand it could mean a more relaxed and reasonable life.”

Likewise, other liberal-leaning groups supported the move.

“President Obama is not only ensuring fair compensation for workers, but he is also taking an important step to help the economy and taxpayers,” Center for American Progress President Neera Tanden said in a statement  (opens in a new tab). “Ensuring workers get the pay they deserve will put more money in the pockets of hardworking Americans, which will boost consumer demand and strengthen our economy.”

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