President Obama announced today that he would direct his administration to revise the rules governing overtime, reflecting the recommendations made by EPI Vice President Ross Eisenbrey and Center on Budget and Policy Priorities Senior Fellow Jared Bernstein. In New inflation-adjusted salary test would bring needed clarity to FLSA overtime rules, Eisenbrey and Bernstein recommend that the Department of Labor (DOL) raise the salary threshold under which workers are covered by overtime provisions and index the threshold to inflation.

“There is not one simple way to reverse the decades of wage stagnation that have dogged American workers,” said Eisenbrey, “but the president’s directive is an important first step. We need bold action to raise America’s pay and create an economy that works for all Americans.”

According to DOL regulations, salaried workers are exempt from being paid “time-and-a-half” for working overtime if they earn more than $455 a week—$23,660 a year—and are classified as managers or executives. Unfortunately it has become all too common for workers whose duties are largely menial and non-managerial to be designated “assistant managers” to be paid a salary and denied any overtime pay, no matter how many hours they work in a week.

Until 1975 the threshold was regularly raised to account for inflation, but has only been increased once since then. Had the weekly salary level simply kept pace with inflation since 1975, it would have been $984 a week—$51,168 a year—in 2013. (Please note: the recommendations in the report are in 2012 dollars). This change would entitle about 10 million more workers to overtime protections.