Labor Secretary Says New Overtime Rule Will Help Millions 'Get Back Into The Middle Class'

BERLIN, GERMANY - OCTOBER 28:  U.S. Labor Secretary Thomas Perez chats with trainees at the Siemens training facility on Octo
BERLIN, GERMANY - OCTOBER 28: U.S. Labor Secretary Thomas Perez chats with trainees at the Siemens training facility on October 28, 2014 in Berlin, Germany. Secretary Perez visited the center to learn more about the German trainee system, in which manufacturers offer paid multi-year training programs to recent high school graduates. U.S. President Obama has expressed interest in adopting the system in the U.S., where thus far training is usually conducted at technical or community colleges, as a way enhance job growth, meet the job requirements of U.S. industry and make the U.S. economy more competitive. (Photo by Sean Gallup/Getty Images)

WASHINGTON -- Over the past year, as his agency was developing a rule to expand overtime pay to more Americans, Labor Secretary Tom Perez met a lot of workers who log brutal hours. Amid all the tales of double shifts and missed time with the kids, something that one man said to him stood out.

"There was one worker who worked 60, 70 hours a week regularly," Perez recalled in an interview with The Huffington Post. "I asked him, 'When was the last time you had a vacation?' He said, 'Vacation? Vacation is when I have a 40-hour week.'"

By that definition, the man may be getting a lot more vacation next year.

On Monday, the White House unveiled a major reform that should guarantee overtime coverage for salaried workers earning less than $50,440 per year. If the proposal goes into effect in 2016 as planned, an estimated 5 million new workers will be eligible for time-and-a-half pay, the standard overtime rate in the U.S., whenever they work more than 40 hours a week.

Currently, those workers are entitled to nothing beyond their base salary for the extra hours they commit, so employers have an incentive to pile it on. But once those workers are guaranteed time-and-a-half, employers will be paying a premium for the extra labor. For many workers, the administration hopes, the change will translate into either a bigger paycheck or more free time.

"I think the overtime rule could have the capacity to help millions of workers get back into the middle class," Perez said.

Last year, the president tasked Perez's team with developing the rule through an executive order. Because of the money at stake, the Labor Department was pressured from all sides -- from business lobbies that didn't want the current rules changed at all, to progressive economists and Democrats who wanted them changed dramatically.

In the end, the White House's proposal landed somewhere in the middle.

Since 2004, due to reforms made under President George W. Bush, the annual pay threshold below which salaried workers are guaranteed overtime pay has been just $23,660. People who make more than that amount and whose jobs are classified in certain ways by their employers -- say, being labeled a manager -- have been excluded from overtime. Some Democrats wanted Obama to raise the cutoff as high as $69,000, thereby entitling the majority of salaried workers to time-and-a-half.

The actual proposal at $50,440 didn't go that far, but it is still significantly more aggressive than many had expected.

The White House wanted the threshold to be equal to the 40th percentile of earnings for salaried Americans. When you look at the job duties performed by people near that line, Perez said, they tend to actually have managerial responsibilities, as opposed to being managers in name only. Perez said he believes the proposal strikes a fair balance.

"We wanted to get back to what the basic intent of the Fair Labor Standards Act was," he said, referring to the law that established overtime pay during the Great Depression. "The fundamental concern we had was that the 2004 rule ... really worked great for employers and was a disaster for workers. We needed to rebalance that."

Rep. Mark Takano (D-Calif.) was among the congressional Democrats pressing the White House to go big. Takano spearheaded a letter to the administration from progressive House lawmakers urging a cutoff of $69,000. Though the actual proposal is more modest, Takano said he was "very pleased" with what the White House decided on.

"I would say what [Obama] has done is very bold. He is more than doubling the level of eligibility," Takano told HuffPost. "That's not a small step. It's a big step."

Retailers agree it's a big step, and since they'll be affected more than most, they're continuing to campaign against the change. They will have ample more opportunity, given the 60-day public comment period before the proposal can be finalized. In a statement Thursday, the National Retail Federation, a trade lobby, said store managers would lose their independence and be forced to watch the clock.

"We think managers are professionals who should be able to make their own decisions. This plan isn’t about expanding the middle class -- it’s about turning salaried professionals into clock-watchers," said David French, the group's chief lobbyist.

Perez said he has met retail managers who would have already asked for overtime pay, had they not feared the repercussions.

"There are workers now who are scared to stand up for their rights, including managers," Perez said. "People think managers have leverage. Well, some do and some don't. 'If I speak up,' I was told repeatedly, 'I might get fired.' They need us to speak for them. That, to me, is an important function of government."



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