US President Barack Obama announced a proposal on Monday which would make up to 5 million additional workers eligible for overtime pay for any work beyond 40 hours a week.
Currently, white collar workers who earn up to $23,660 a year are eligible to earn overtime; with the changes, the threshold goes up to $50,440.
Explaining the proposal in a blog post on the Huffington Post website on Monday, Obama said that “Right now, too many Americans are working long days for less pay than they deserve.”
White collar workers who are classified as managers exempt from overtime pay would, under the new regulations, be entitled to time and a half earnings for every hour worked beyond the weekly limit.
An official from the Obama administration who spoke to Bloomberg on the condition of anonymity said that the regulations would take effect in 2016. The regulations will most likely affect workers in retail stores and restaurants.
Jared Bernstein, a former economic adviser to Vice President Joe Biden who is now a senior fellow at the Center for Budget and Policy Priorities told Bloomberg “You would be hard pressed to find a rule change or an executive order that would reach more middle class workers than this one.”
Obama is expected to discuss the proposal in detail during a visit to Wisconsin on Thursday, while US Labour Secretary Thomas Perez is scheduled to host a press conference on Tuesday.
The proposed changes to overtime pay will be open for public comment and will not be finalised until 2016. They can be enacted through regulation, without approval from the Republican-led Congress, the Associated Press reported.
Many Republicans oppose increasing the threshold for eligibility for overtime pay, arguing that it would discourage companies from creating jobs.
Chairman of the Senate Labour Committee Lamar Alexander (R-Tenn.) previously criticised Obama’s plan as having been “engineered to make it as unappealing as possible to be an employer creating jobs in this country.”
Randy Johnson, a vice president at the US Chamber of Commerce, said on Monday that the increase in the number of employees eligible for overtime pay will result in a decreased number of full-time jobs and cause some workers to lose their benefits and promotion opportunities.
“This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact,” he said in a statement.
Supporters of the proposal, such as Judith Conti at the National Employment Law Project, say overtime measures were put in place not to increase financial compensation for employees but to protect the 40-hour work week.
“Some people will work fewer hours for the same money and have more control over their lives, some will work the same hours for more money,” Conti said.