Obama’s Proposed Changes to Overtime Rules – Two Perspectives (Part 1)

Among the biggest 2014 headlines in the world of wage and hour law is President Obama’s landmark decision to try to raise the threshold for overtime. This move could allow millions of workers who currently do not receive it to collect overtime. But will this push help or hinder workers? Is it fair? Who will benefit, and who will pay?

In today’s post and one that will follow, we will provide a close analysis of President Obama’s overtime move from a political and economic perspective and share two divergent opinions about the initiative’s utility and costs/benefits.

Obviously, since the Joseph & Kirschenbaum team actively participates in wage and hour litigation – Maimon Kirschenbaum’s work advocating for the rights of restaurant workers in New York City has made him a household name among restaurant owners in the Big Apple – we can’t be an objective source of analysis about the Presdident’s proposed plans.

However, we can surface and discuss the key points and counterpoints raised by advocates on both sides of the debate.

In today’s post, we’ll take a look at the USA Today’s Editorial Board’s advocacy position, published on March 23, 2014 in an op-ed entitled: “Raise overtime pay threshold: Our View.” The Board noted that both federal pensions and Social Security payments are regularly adjusted for inflation, but the overtime threshold — the point at which companies must pay their workers overtime — has only been adjusted one time over the past four decades. The Board notes: “as a result, in 1975, a worker making $51,168 or less in today’s dollars was guaranteed overtime. Today, someone could make barely half of that annually and not get paid for work beyond 40 hours. He or she need only be classified as professional or managerial and be given a straight salary.”

For this reason, President Obama signaled an intention to raise the threshold and to make other changes in labor rules to prevent lower income workers from being denied overtime.

The Board also noted that “The current overtime threshold — $23,660 a year — is below the poverty line for a family of four. All told, 6 million to 10 million workers not receiving overtime pay would get it, if Obama raised the threshold to the 1975 level.”

While the USA Today Editorial Board did not believe that Obama would be able to push the threshold back to 1975 numbers — it acknowledged that such a move could burden businesses and potentially disempower certain sectors of the economy — it made these provocative arguments:

“[A raise in the overtime threshold] could… encourage employers to hire more workers, instead of loading unpaid overtime on current employees. And it would give workers more money to spend on the products that the companies sell.”

Of course, divergent views on this topic abound. Some critics see Obama’s threshold push as a political move as much as an economic one. We’ll discuss that point and others in a subsequent post on this topic.

In the meantime, if you or someone you love needs help with a Fair Labor Standards Act (FLSA) or overtime legal issue, call the Joseph & Kirschenbaum team at (212) 688-5640 for a free consultation, or get in touch with us via email at info@jhllp.com.