The Labor Department announced Tuesday that it had submitted a proposed new regulation governing when employers must pay overtime to their workers to the White House’s Office of Management and Budget for review, meaning the proposal will be made public soon. The administration has said the rule will cover millions more workers, substantially raising labor costs for many businesses.
“The rules governing who is eligible for overtime have eroded over the years. As a result, millions of salaried workers have been left without the guarantee of time and a half pay for the extra hours they spend on the job and away from their families,” said Labor Secretary Tom Perez in a posting Tuesday on the department’s official blog.
Under the Fair Labor Standards Act, employers must pay overtime to workers who do more than 40 hours a week. But workers can be exempted from that requirement if their responsibilities are deemed “managerial” in nature — also known as the “white-collar” exemption. One of the main requirements for the exemption is the workers must earn more than $23,000 annually. Critics, including the president, have argued this standard is far too low and often abused by employers.
Perez said the new proposed rule was made after “extensive research, study and careful analysis” but did not given any indication of how high the department said the wage cap should be or if any other requirements were included. The department’s proposal has not been made public.
“A draft proposal has been sent this morning to the Office of Information and Regulatory Affairs at the Office of Management and Budget,” Labor Department spokesman Jason Surbey told the Washington Examiner. “After OIRA concludes its review, the department will publish a proposed rule in the Federal Register. After publication, there will be a period during which interested parties can share their views on the proposed rule.”
The Huffington Post reported in January that the White House was considering setting the new wage cap at $41,000. Liberal advocacy groups have called for it to be at least $51,000.
“A strong rule, one which raises the overtime threshold to at least $51,000 a year, could benefit 5-10 million workers. It would provide a better work-family balance for millions of workers, giving some higher pay for working overtime and others reduced hours without any reduction in pay,” said Ross Eisenbrey, executive vice president of the Economic Policy Institute, a nonprofit think tank allied with organized labor.
