President Obama raises the overtime salary threshold, reestablishing a key labor standard

http://www.washingtonpost.com/posteverything/wp/2015/06/29/president-obama-raises-the-overtime-salary-threshold-reestablishing-a-key-labor-standard/

By Jared Bernstein June 29,2015

By significantly increasing the salary threshold below which salaried workers get overtime pay, President Obama just took a big step toward updating a critical labor standard with the potential to boost the paychecks of millions of middle-wage workers, many of whom should be getting overtime but are not.

And because this is a “rule change”—analogous to an executive order—it doesn’t have to go through this Congress, where conservatives would surely try to kill it. In other words, the president meant it when a few months back he said that if Congress wasn’t willing to work with him to help reconnect the economic fortunes of the middle class to the growing economy, he’d find ways to do it himself.

In this case, the reconnection involves the updating of labor standards introduced in the Fair Labor Standards Act (FLSA) of 1938, legislation that included a national minimum wage and time-and-a-half pay for hourly and certain salaried workers after 40 hours of weekly work.

Why cover any salaried workers? Because the law needed to preempt the possibility that some employers might just label someone a salaried worker to avoid having to pay time-and-a-half. So a salary threshold was introduced, below which workers were automatically non-exempt. The problem is the threshold wasn’t regularly adjusted for inflation, and while it has been sporadically raised, it has fallen well behind its historical levels, once you adjust for inflation (the new rule also proposes to index the new threshold to either price or wage growth; which one will be decided during the forthcoming comment period, where outside stakeholders can weigh in on the proposed rule).

The current threshold is only about $23,700. The president’s proposal takes it up to $50,400, about $970 per week.

As Ross Eisenbrey argued in a paper written a few years ago (for the 75th anniversary of the FLSA), that’s the 1975 threshold, adjusted for inflation.

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