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Obama Wants To Double Overtime Threshold

It may be just a matter of days before the Obama administration doubles the salary levels that would require employers to pay overtime. He also doesn't need Congress's permission. In fact, the Labor Department could propose a rule that would raise the current overtime threshold of $23,660 to as much as $52,000. This will extend time and a half overtime pay to millions of American workers. Republican opponents argue that it will kill jobs and force employers to cut hours for salaried employees. Bill Samuel, director of legislative affairs for the AFL-CIO said “The minimum wage they can’t do. This is probably the most significant step they can take to raise wages for millions of workers.”

Randel Johnson, senior vice president for labor at the Chamber of Commerce, warned Labor Secretary Tom Perez in a Feb. 11 letter that any changes to existing overtime rules “threaten to upend years of settled law, create tremendous confusion, and have a significantly disruptive effect on millions of workplaces.”

Current law states that any salaried worker who earns below a threshold set by the Labor Department must receive overtime. The proposed rule is expected to raise that to somewhere between $45,000 and $52,000—closer to the median household income. The current threshold has only been updated once since 1975, and it covers 12 percent of salaried workers. Right now, the white collar exemption excludes “executive, administrative and professional” employees from receiving overtime pay.

Daniel Hamermesh, an economist at the University of Texas at Austin said “It’s hard to believe that somebody making $30,000 is a supervisor.”

While this sounds like an upgrade for millions of workers, one key concern is that it could prompt employers to reduce the number of hours individual employees work to avoid paying time-and-a-half. McDonald's already uses a computer system that tells franchisees to send this or that worker home the moment they exceed 40 hours.

Aloysius Hogan, a senior fellow at the conservative Competitive Enterprise Institute, said it will have a “job killing effect.” Hogan said businesses will lay off higher-paid executives and replace them with lower-paid workers, which is already happening at many large and small companies throughout America. A spokesman for Dr. Ben Carson addressed the issue by saying “I don’t think anyone has offered any compelling evidence that a new labor department overtime regulation is warranted,”

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