Labor Department proposal would make millions more eligible for overtime

WASHINGTON – The Obama administration will propose requiring overtime pay for workers who earn nearly $1,000 per week, three individuals familiar with the plan said Monday, more than doubling the current threshold and extending overtime protection to about 5 million workers.

Currently, salaried employees who are paid more than $455 a week — or $23,660 a year — can be exempted from overtime pay if their employer deems them to be “managers,” even if they have little in the way of supervisory duties. The Labor Department’s long-awaited proposal will raise the threshold to $970 a week — $50,440 a year — by 2016.

To keep up with future inflation and wage growth, the proposal will peg the salary threshold at the 40th percentile of income, said the individuals, who requested anonymity to discuss the proposal ahead of the official announcement.

President Barack Obama was to announce the proposal Tuesday morning in an op-ed in The Huffington Post, said one of the individuals. The White House declined to comment.

The Labor Department’s estimates suggest the proposal would raise wages for 5 million people, but other estimates are far higher. The Economic Policy Institute, a liberal think-tank , recently estimated that a threshold of $984 a week would cover 15 million people.

“This is by definition middle-class people. This reverses decades of neglect,” said EPI President Larry Mishel, adding that the proposal would also likely create jobs for hourly workers.

___

Associated Press writer Jim Kuhnhenn contributed to this report.