Obama Plan to Boost Overtime Pay Includes 300 Inspectors
Felix, who said he was denied overtime pay, joined other workers and business owners yesterday at a White House ceremony as President Barack Obama signed a measure to make more people eligible for the extra pay.
Worker advocates applauded Obama’s focus on the issue. Last week, he requested funding for 300 new Labor Department investigators to ensure that workers are paid what they’re due.
“The extent to which people’s rights are being violated is really quite extraordinary,” said Ross Eisenbrey, vice president of the Economic Policy Institute, a Washington-based non-profit group affiliated with labor. “Surveys say 30 percent of employers are violating minimum wage and overtime provisions.”
The focus on wage and hour rules has employers bracing for more investigations by an administration they perceive to be biased in favor of workers, according to Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce.
“I’m not going to say that they’ve gone too far,” Freedman said in an interview. “Let’s just say that this administration has a determined focus on enforcement.”
“Unfortunately, today millions of American aren’t getting the extra pay they deserve,” Obama said at the ceremony where he directed the Labor Department to revise overtime rules. “I’m going to do what I can on my own to raise wages for hardworking Americans.”
While not identifying specific changes, Obama said the threshold below which overtime pay is guaranteed is too low. Obama praised companies such as Costco Wholesale Corp. (COST) and Gap Inc. for paying higher salaries to keep workers and boost productivity.
Labor Secretary Thomas Perez will ask department staff to collect data from workers, employers and others over the next several months, a department spokeswoman said in an e-mail. A proposal will be published later this year, she said.
“What we really need is a stronger economy, and also simplicity,” Diane Swonk, chief economist at Mesirow Financial Inc., told Mark Crumpton on Bloomberg Television. “Inequalities don’t get helped by more complexity in the tax code, more complex federal programs.”
One measure of a need for change is a jump in class-action lawsuits that allege violations of labor laws, according to Gerald Maatman Jr., chairman of the class-action group at the law firm Seyfarth Shaw LLP. There were 7,764 federal labor law cases filed last year compared with 1,854 in 2000.
“Obama has put a lot of resources into enforcement. Now he’s going to the next level,” Maatman said in an interview.
Obama’s budget proposal to Congress released last week requests a 19 percent increase for the department’s Wage and Hour Division, with an added $36.5 million to enforce minimum wage, overtime, child labor, and other laws under the Fair Labor Standards Act.
The department’s 1,200 labor-standards investigators cover 130 million workers in more than 7 million workplaces, according to Seth Harris, who resigned in January as acting secretary of labor. Limited resources means they must focus on the worst offenders leaving many complaints unresolved.
“Just describing the math very effectively communicates how deeply difficult the task that the Wage and Hour Division has been given can be,” Harris said in an interview. “As a result of that, there are other workers whose rights may well have been violated who may have had their wages stolen or their overtime taken away who don’t get their rights vindicated.”
In 2010, with Democrats in control of both houses of Congress, funds to hire 300 inspectors were approved. Repeating that today with a divided Congress is unlikely, Harris said.
“My guess is that the Senate, only if it remains in Democratic hands, will want to invest some additional money in wage and hour, although it’s unlikely that they will have enough money to fund the full 300 positions,” Harris said. “They may make a small investment to indicate they want to support the president’s policy.”
Obama said in his State of the Union address in January that he plans to use executive authority when he can in the face of resistance in Congress to his proposals. Obama raised the minimum wage for federal contract workers and is lobbying Congress to boost it to $10.10 an hour nationally.
The overtime initiative aims to rewrite rules issued by President George W. Bush in 2004 that set $455 per week as the threshold for what constitutes a white-collar worker for purposes of overtime pay. Employees making more than $455, or about $23,500 a year, must meet other eligibility requirements to be paid overtime.
Obama is also seeking changes to rules that allow employers to exempt workers from the overtime requirement, Harris said.
About 10 million workers might benefit from the rule if it applied to people making less than $50,000 a year, the Economic Policy Institute said.
“While specifics have yet to be released, it’s clear that this change would cost manufacturers and does nothing to achieve the goal of job creation,” Joe Trauger, vice president of human resources policy at the National Association of Manufacturers, said in an e-mail. “This administration fails to understand the financial stress and pressure they are placing on businesses.”
Richard Trumka, president of the AFL-CIO labor federation, said U.S. wages have remained stagnant even as productivity has risen.
“So it’s important that people get paid what they’re due, that they’re not be forced to work overtime, disguised overtime for nothing, that they get paid for all the time that they actually work,” Trumka said in an interview March 11.
Felix’s employer, Smooth Ride Transportation LLC, said he was paid everything he deserved and his complaint about being underpaid is exaggerated.
Felix, 59, said he earned less than the $455 per week cutoff that should have made him automatically eligible for overtime pay.
“I can recall very good the first three months working a lot of overtime, I worked a lot of weekends,” Felix, who has since left the company, said in an interview. “I added up how much I would have earned at overtime and it was $2,000. After I saw the amount I realized it was too much money for me to turn my back on and let go.”
Felix, of Washington, took his case to the Employment Justice Center, a worker’s right group in Washington. Hannah Kane, an employment justice organizer with the group, said they referred him to the D.C. Department of Employment Services.
Felix said he filed a complaint in October 2012 with the office which audited his Smooth Ride and found that he was entitled to overtime. A spokeswoman at the office said she was unable to discuss Felix’s case or provide records without a written request and several days notice.
Ezekiel Nolan, who described himself as Felix’s supervisor at the Fort Washington, Maryland-based Smooth Ride, declined to discuss the details of the case.
“I’m sure a lot of it was exaggerated,” Nolan said referring to Felix’s complaint. “Everything that he was supposed to get he got and that’s the end of it. Half of what he’s saying is bogus.”
To contact the editors responsible for this story: Jon Morgan at email@example.com Steve Geimann