Obama Will Seek Broad Expansion of Overtime Pay

In 2012, the share of the gross domestic income that went to workers fell to 42.6 percent, the lowest on record.

Under current federal regulations, workers who are deemed executive, administrative or professional employees can be denied overtime pay under a so-called white-collar exemption.

Under the new rules that Mr. Obama is seeking, fewer salaried employees could be blocked from receiving overtime, a move that would potentially shift billions of dollars' worth of corporate income into the pockets of workers. Currently, employers are prohibited from denying time-and-a-half overtime pay to any salaried worker who makes less than $455 per week. Mr. Obama's directive would significantly increase that salary level.

In addition, Mr. Obama will try to change rules that allow employers to define which workers are exempt from receiving overtime based on the kind of work they perform. Under current rules, if an employer declares that an employee's primary responsibility is executive, such as overseeing a cleanup crew, then that worker can be exempted from overtime.

White House officials said those rules were sometimes abused by employers in an attempt to avoid paying overtime. The new rules could require that employees perform a minimum percentage of "executive" work before they can be exempted from qualifying for overtime pay.

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"Under current rules, it literally means that you can spend 95 percent of the time sweeping floors and stocking shelves, and if you're responsible for supervising people 5 percent of the time, you can then be considered executive and be exempt," said Ross Eisenbrey, a vice president of the Economic Policy Institute, a liberal research organization in Washington.

Jared Bernstein, the former chief economic adviser to Vice President Joseph R. Biden Jr., and the former executive director of the White House Task Force on the Middle Class, embraced Mr. Obama's move.

"I think the intent of the rule change is to make sure that people working overtime are fairly treated," he said. "I think a potential side effect is that you may see more hiring in order to avoid overtime costs, which would be an awfully good thing right about now."

Mr. Bernstein, now a senior fellow at the Center for Budget and Policy Priorities, a liberal research group, and Mr. Eisenbrey wrote a paper last year urging the administration to raise the salary threshold for overtime to $984 a week. Their study estimated that in any given week, five million workers earning more than the current threshold of $455 a week and less than $1,000 a week are likely to be exempted from overtime. President Bush raised the threshold to $455 in 2004.

Mr. Bernstein said, "Remember, inflation has eroded this threshold a great deal over the years, so it's hard to see why it's unfair to make that adjustment."

White House officials said that in California an employer cannot deny overtime pay to a salaried worker who makes less than $640 a week. In New York, the threshold is $600 a week. Under recently passed laws, the California threshold is set to rise to $800 per week in 2016, and the New York threshold to $675.

If the changes to the overtime regulations are made, it will fall to the Labor Department's wage and hour administrator to put them into effect. That position has been vacant since Mr. Obama took office. David Weil, a professor at the Boston University School of Management, is the latest nominee for the post. He is awaiting confirmation.

—By Michael D. Shear and Steven Greenhouse of The New York Times