A new plan unveiled by President Barack Obama would increase overtime pay for some five million U.S. workers.
Currently, any salaried employee who is making at or above $23,660 is ineligible for overtime pay from his or her employer—even if they exceed a 40 hour work week. The president’s plan would raise that salary threshold to $50,440.
“Right now, too many Americans are working long days for less pay than they deserve,” Obama said in an announcement op-ed published by the Huffington Post. A mandatory review period for the proposed plan is required, but congressional approval is not. The plan is set to kick in next year.
The U.S Department of Labor reported that, under this plan, the per-week earnings threshold—at which employees are no longer eligible for overtime pay—rises from $455 to $970. Any worker who makes as much or below the new total and works 40 hours a week will automatically qualify, according to U.S. Department of Labor guidance.
What will not change, however, is the fact that employers can label a worker who earn above the threshold and work long hours in fast food or retail as a “manager” even if that person does little supervisory work, and then deny them overtime.
The overtime threshold was last raised in 2004—the first time since the 1970s. It has effectively fallen with inflation, leaving just 8 percent of salaried workers eligible, down from 65 percent in 1975.