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Obama to seek big expansion of overtime pay

Obama’s decision to use his executive authority to change the overtime rules is aimed at bypassing Republicans in Congress.

Craig Ruttle/Associated Press

Obama’s decision to use his executive authority to change the overtime rules is aimed at bypassing Republicans in Congress.

WASHINGTON — President Obama this week will seek to force businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians, and others whom many firms currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials.

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Obama’s decision to use his executive authority to change the overtime rules is aimed at bypassing Republicans in Congress, who have blocked most of his economic agenda and have said they intend to fight his proposal to raise the federal minimum wage to $10.10 per hour from $7.25.

Obama’s action is certain to anger the business lobby, which has long fought for maximum flexibility for companies in paying overtime. In 2004, business groups persuaded President George W. Bush’s administration to allow them greater latitude on exempting salaried white-collar workers from overtime pay.

Conservatives criticized Obama’s impending action. “There’s no such thing as a free lunch,” said Daniel Mitchell, a senior fellow with the Cato Institute, who warned that employers might cut pay or use fewer workers. “If they push through something to make a certain class of workers more expensive, something will happen to adjust.”

Marc Freedman, the executive director of labor law policy for the US Chamber of Commerce, said the nation’s overtime rules “affect a very wide cross section of employers and our members.”

Obama’s authority to act comes from his ability as president to revise the rules that carry out the Fair Labor Standards Act, which Congress passed in 1938. Bush and previous presidents used similar tactics at times work to around Congress.

The proposed regulations would increase the number of people who qualify for overtime and continue Obama’s fight against what he says is a crisis of economic inequality in the country. Changes to the regulations will be subject to public comment before final approval by the Labor Department, and it is possible that strong opposition could cause Obama to scale back his proposal.

Since the mid-1980s, corporate profits have soared, reaching a post-World War II record as a share of economic output. The profits of the companies in the Standard & Poor’s 500 have doubled since the recession ended in June 2009, but wages have stagnated for the vast majority of workers.

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

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