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News from EPI EPI Calls On the Obama Administration to Update Overtime Rules

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Today, the Economic Policy Institute released a policy memo from Vice President Ross Eisenbrey detailing changes President Obama could make to overtime rules to lift wages for millions of Americans.

The Fair Labor Standards Act of 1938 mandates that most of the U.S. workforce be paid at 1.5 times their regular rate of pay for working more than 40 hours in a week, but salaried workers earning above a certain amount are exempt from overtime rules if they are classified as professionals, administrators, or executives. Unfortunately, relatively low-paid workers are being excluded from overtime pay because the threshold for exemption has not risen with inflation.

Eisenbrey calls on the Department of Labor to update outdated definitions of who is exempt from overtime and raise the salary threshold from $455 per week to $970 per week, or $50,440 a year.

“$455 per week, or $23,660 a year, is only $2 a week above the poverty level for a family of four. Far from being an executive salary or a professional salary, it makes a joke of the law’s provisions,” said Eisenbrey. “As the rules stand now, an assistant manager at a fast food restaurant who spends 95 percent of his (or her) time cooking fries, running a cash register, sweeping floors, and moving supplies into and out of the freezer can be denied any overtime pay and work 60 or 70 hours a week if his salary is at least $23,660 a year.”

This change could be made by the Secretary of Labor and would not require approval from Congress, making it an easy way to avoid Congressional obstruction and lift Americans’ wages. Eisenbrey has previously written about this issue in an op-ed in the New York Times.

“American workers are more productive and yet their wages have been flat,” said Eisenbrey. “Workers are working longer hours but getting the same paycheck.”

Eisenbrey said that updating the overtime rules is just one step in increasing the wages of American workers, but that it is an important step that the President and the Obama administration can take without Congressional approval.