March 13th, 2014
03:21 PM ET
7 months ago

Obama says it's time to change overtime rules

Washington (CNN) - Current rules governing overtime pay are "wrong," President Barack Obama said Thursday as he signed an order directing his administration to reexamine how employees are paid for working more than 40 hours per week.

"Overtime is a pretty simple idea. If you have to work more, you should get paid more," Obama said at the White House. "Unfortunately today, millions of Americans aren't getting the extra pay they deserve."

Currently, most hourly workers must be paid time-and-a-half if they work more than 40 hours a week. Most salaried workers do not need to be paid overtime, unless they earn less than $455 a week.

But that works out to $23,660 a year, which is less than the federal poverty level for a family of four.

The $455 threshold for overtime hasn't been raised in 10 years, since President Bush upped it from $250 a week. It would be $553 today if it had gone up in line with inflation.

"If your salary is even a dollar above the current threshold, you may not be guaranteed overtime...your employer doesn't have to pay you a single extra dime," Obama said. "And I think that's wrong."

Obama's push to expand overtime pay for workers pairs with his call on Congress to raise the federal minimum wage to $10.10 per hour, which has faced resistance from Republican lawmakers and some businesses.

The White House has declared 2014 a "year of action" in combating income inequality. Thus far the primary vehicle for the initiative has been executive actions and orders that don't require Congressional approval, though Obama says he's willing to work with lawmakers to help close the gap between rich and poor.

Like a previous order that requires federal contractors to pay employees $10.10 per hour, the overtime pay order that Obama signed on Thursday does not require Congressional approval.

And like the wage increase, business groups were quick to suggest the change could be bad for firms.

"Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive and will force employers to look for ways to cover these increased costs," said Marc Freedman, the executive director of Labor Law Policy at the U.S. Chamber of Commerce.

"Similar to minimum wage, these changes in overtime rules will fall most harshly on small and medium sized businesses."

CNNMoney's Chris Isidore contributed to this report.


Filed under: President Obama
soundoff (20 Responses)
  1. ThinkAgain: Don't like Congress? Get rid of the majority repub/tea bag members

    "Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive and will force employers to look for ways to cover these increased costs," said Marc Freedman, the executive director of Labor Law Policy at the U.S. Chamber of Commerce.

    If lower-wage workers earn more money, they will spend more, resulting in higher demand and a need for increased production which will cause employers to hire more people.

    Ain't logic grand?

    March 13, 2014 03:26 pm at 3:26 pm |
  2. smith

    @Think Again-The price of products will raise right along with a min. wage increase. So there won`t be any extra cash to spend. Common sense.

    March 13, 2014 03:40 pm at 3:40 pm |
  3. smith

    Another side to the coin is if you work less than 40 hrs a week you still get paid the same. That`s the incentive to go to salary.

    March 13, 2014 03:43 pm at 3:43 pm |
  4. Rla

    This community organizer shows he still is a community organizer with other peoples money

    March 13, 2014 03:43 pm at 3:43 pm |
  5. Smitty

    Does this idiot know anything about business ??? Clearly the BIGGEST LIAR OF THE YEAR and Putins punching bag will mess this up also !!!

    March 13, 2014 03:48 pm at 3:48 pm |
  6. Dutch/Bad Newz, VA -aka- Take Back The House

    These are the issues democrats need to be addressing the nation with. Income Inequality Stupid!!!!

    March 13, 2014 03:52 pm at 3:52 pm |
  7. Silence DoGood

    High profits? The CEO and leadership must be amazing, visionary! Give them more money.
    Low profits? The workers are paid too much! Take theirs away.

    March 13, 2014 03:52 pm at 3:52 pm |
  8. Rudy NYC

    ThinkAgain ... ... wrote:

    If lower-wage workers earn more money, they will spend more, resulting in higher demand and a need for increased production which will cause employers to hire more people.

    Ain't logic grand?
    --------------------
    It sure is. I have a better idea. Instead of putting a few more dollars in the hands of millions of people, let's put millions of dollars in the hands of just a few peope. They'll spend it on even more stuff, thus creating even more jobs.

    Aren't altruisms grand? Most especially when we package them up as a trojan horse.

    FIFY

    March 13, 2014 03:54 pm at 3:54 pm |
  9. Bill from GA

    ThinkAgain: Don't like Congress? Get rid of the majority repub/tea bag members – "If lower-wage workers earn more money, they will spend more, resulting in higher demand and a need for increased production which will cause employers to hire more people."

    If lower-wage workers are paid more money, higher paid workers will have to be paid more to keep them above the lower-wage workers. And management will get more for managing them all. And goods will cost more. And lower wage workers will (hopefully) still be able to buy what they did before, only they pay more for it.

    Ain't logic grand?

    if Obama wants more inflation, get the Fed to raise the interest rate. Bush's cutting the interest rate to near ZERO was, like his tax cuts, meant to be (or at least sold as) TEMPORARY.

    March 13, 2014 03:56 pm at 3:56 pm |
  10. Joan

    When an individual is interviewed for a position, they are told whether the pay will be hourly or salary. This decision should be decided between the employer and employee, not the government.

    March 13, 2014 04:00 pm at 4:00 pm |
  11. Wake up People!

    I wonder if this will make him a weakling, a dictator, or both?!?!

    March 13, 2014 04:02 pm at 4:02 pm |
  12. Sniffit

    "will force employers to look for ways to cover these increased costs"

    And the one thing they're not willing to do: take home $8M per year instead of $10M per year.

    Quite frankly, it should be illegal for any employer in this country to pay their employees in a manner that requires them to turn to government assistance for help while simultaneously paying their managers, directors, officers and executives millions of dollars. All that amounts to is everyone else's tax dollars supplementing their lavish salaries and benefits while they screw their employees and make that gov't assistance necessary. Gov't assistance was never meant as a means for employers to avoid paying living, sustainable wages and to engage in abusive labor practices all in the name of enriching the top echelon of the corporate structure and their stock holders. Legislation should be proposed immediately to address that situation...and the plutocrats can cry bloody tears all they want because at least we're letting them keep their heads...this time.

    March 13, 2014 04:04 pm at 4:04 pm |
  13. tiz

    He's changing the rules on lots of things now...... #terribleleader

    March 13, 2014 04:08 pm at 4:08 pm |
  14. tom

    Lets look at this if you increase the overtime rules and minimum wage at basically the same time then this is what is going to happen. You will have buisness owners hire more people , but you will have more cut hours and put managers on hourly wages instead of salary with hours cut would not qualify for overtime anyway. All this was from the President/King is a political stunt to buy votes when his poll numbers are down and democrats dont want to be seen with him anyway.

    March 13, 2014 04:08 pm at 4:08 pm |
  15. Reggie53

    @ ThinkAgain: Where is your logic? Okay tell me how will these companies be able to afford increasing the minimum wage, pay overtime and pay the higher cost of healthcare? So when all these are in place you will find companies either cutting hours, hiring more part- time employees over full-time and maybe not even hiring more people. So if this happens, where will be the extra money be earned if there no new jobs or hours are cut? You have to be a democrat because you are thinking like Obama....no common sense at all!!!! I suppose you never ran a business before in your life to know that you cannot increase your overhead so much with all these extra costs at one time because then you will running at a loss. Reminds me of Obama.....only knows how to be a community organizer so that is why he comes out with such ideas without thinking them out first. I think he has dreams and then comes out the next day with these ideas.......no leadership skills at all.

    March 13, 2014 04:23 pm at 4:23 pm |
  16. Ol' Yeller

    "If lower-wage workers earn more money, they will spend more, resulting in higher demand and a need for increased production which will cause employers to hire more people."

    No... no... no.... You have it all wrong. If you give the rich ALL the money, then it will fill their pockets and Cayman Islands bank accounts so full, some loose change will inevitably overflow and the peons can fight to the death over the scraps.
    Trickle Down economics.... Making the rich richer and the poor poorer since ronald reagan.

    March 13, 2014 04:31 pm at 4:31 pm |
  17. tom l

    I love how liberals think that not taking more in taxes is "giving" money to people. Must be so sad to go through life always worried about what someone else has.

    March 13, 2014 04:52 pm at 4:52 pm |
  18. Gurgyl

    Minimum wage needs changed to 12/ hourly.

    March 13, 2014 04:58 pm at 4:58 pm |
  19. Sniffit

    "All this was from the President/King is a political stunt to buy votes"

    Yeah, cuz he's soooooo running for office in 2016. Yawn.

    March 13, 2014 05:00 pm at 5:00 pm |
  20. Gurgyl

    @Ria, that community organizer is 10,00000000000 times better than bush, Reagan because no wars, no trickle-down loots. Look at stocks, you say Economy is recuperating, you ask people that were denied healthcare because of PRE-EXISTING CONDITION. quit your racial idiocy., learn to respect–yes, he is DEMOCRATICALLY ELECTED PRESIDENT–TWICE, TWICE.

    March 13, 2014 05:08 pm at 5:08 pm |