WASHINGTON -- President Barack Obama this week will propose a plan to extend overtime pay to 5 million American workers who are currently excluded under federal law, according to sources.
The president will recommend updating overtime rules so that salaried workers who earn less than roughly $50,400 per year would be guaranteed time-and-a-half pay when they work more than 40 hours in a week. Under the current rules implemented by former President George W. Bush, salaried workers must earn less than $23,660 per year in order to be automatically eligible for overtime pay.
The president announced his intention to make overtime reforms last year, but the details of the plan have been kept secret until this week. The president is expected to discuss the proposal later this week during a visit to Wisconsin. Details of the proposal were first reported by Bloomberg.
In a blog post on The Huffington Post Monday night, Obama said that "too many Americans are working long days for less pay than they deserve," and that his proposal would help assure that "hard work is rewarded."
"That’s how America should do business," the president wrote. "In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America."
With heavy lobbying by business groups, many progressives feared the White House would recommend only modest changes, thereby impacting relatively few workers and employers. Instead, the White House has proposed a substantial reform that has the potential to change pay and scheduling for millions of people.
Employers whose workers become newly eligible for overtime will now face a choice: Either pay a premium for those extra hours worked, or get the employee's hours below 40 per week, likely by shifting the labor to other workers. The proposal would be robust enough to cut across industries, bringing many workers either more pay or more time off, and forcing many employers to grapple with overtime costs that they never had to before.
The proposal must still undergo a public-comment period before it can be finalized and go into effect, but the release of a concrete proposal will mark a major step in what's likely to be one of the president's most far-reaching reforms undertaken without congressional approval. The changes are expected to go into effect in 2016.
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