US expands overtime pay coverage to 4.2 million workers
Washington, May 18
The White House announced today the extension of overtime pay benefits to 4.2 million American workers forced to work long hours for relatively low wages.
The move addresses a decades-long trend of businesses requiring 50- and 60-hour weeks of a growing body of workers classified as managers and supervisors but paid barely more than those on hourly wages.
But, when the rule comes into force on December 1, it is expected to raise the workforce cost for many businesses already facing pressure to increase their minimum hourly pay as well.
The action raises the pay threshold below which employees must be paid overtime wages after working 40 hours a week.
The threshold had been held at $455 a week for more than a decade, and will be doubled to $913 a week, the equivalent of nearly $47,500 a year.
“If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones. It’s one of the most important steps we’re taking to help grow middle-class wages,” President Barack Obama said in a statement.
He cited the case of Elizabeth Paredes, an assistant manager in a Tucson, Arizona, sandwich shop who had worked up to 70 hours a week but because her salary was over the $455-a-week threshold, she never earned any overtime pay.
“This policy just hasn’t kept up with the times,” Obama said.
White House said only seven per cent of Americans qualified for overtime under the old threshold, compared with 60 per cent of workers in 1975.
Analysts say that erosion has contributed to stagnation of wages for lower- and middle-class workers nationally, and shrinking of middle class. But business groups were quick to blast the new policy as excessive and harmful to small firms.
The National Retail Federation and others argued that workers would suffer by being reclassified from managerial status to hourly worker status, and would lose flexibility in their daily work.