Remarks at the Overtime Final Rule Rollout, Jeni's Splendid Ice Cream Headquarters, Columbus, OH, May 18, 2016

[as prepared for delivery]

Good afternoon everyone. Senator Brown, thank you very much. And thank you especially for your remarkable tenacity in fighting for the rights of the middle class and working people every day. Thank you also to everyone at Jeni’s for their hospitality, for opening their workplace to us today.

We’re here today to announce a final, updated overtime rule that, at its core, is about one simple thing: making sure middle-class jobs pay middle-class wages.

When I was a kid growing up in Buffalo, many of my friends’ parents were managers. For them and millions like them, that was a good-paying job. Being a manager meant being in the middle class.

And rightly so. They supervised people, opened and closed the store, handled the money – and they were paid according to the trusted, valuable role they played in the company. They sometimes worked long hours, but they were fairly compensated for that time. As a result, they were able to own a home, raise a family and build a nest egg for retirement.

These good-paying, middle-class jobs were not a fluke brought about by invisible market forces. They were good-paying, middle class jobs by design.

The blueprint was the Fair Labor Standards Act, which gave most Americans the right to a minimum wage and time-and-a-half pay for more than 40 hours of work in a week -- otherwise known as “overtime”. It was meant to address the question of both underpay and overwork, by setting both a wage floor and an hours ceiling.

In so doing, the Fair Labor Standards Act became the crown jewel of worker protection and helped build the middle class. But the crown jewel has lost its luster -- because too few people are now getting the overtime that the FLSA intended.

Some salaried workers are exempt from overtime if they perform certain duties at work and if they earn more than the salary threshold. But that threshold is woefully out-of-date and its purchasing power in shambles. If you had simply indexed the original threshold to inflation in 1975, today it would be more than $57,000 annually. I’ll quote an expert, Jeni’s CEO John Lowe, who says the current threshold is “ridiculously low” and should be brought into the modern era.

The last time rule was updated, in 2004, the Bush Administration made policy choices that further eroded overtime protections. Those choices took leverage away from working people and gave it to employers. The result is that today – in what was once a solidly middle class job – a manager can be a single mother of three, work 60 hours per week, and still live below the poverty line, earning as little as $455 per week.

She may manage the restaurant that serves us dinner, or sell us the groceries we need to cook it ourselves. But there’s an empty chair at her dinner table on far too many nights and weekends. And she’s not being compensated for it.

America can do better.

The FLSA stands for the basic proposition that if you work full-time in America, you should be able to get by. And when you take on important responsibilities and work extra, you should be in the middle class.Today’s announcement will go a long way to restoring the luster of that crown jewel of worker protection.

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The white collar exemption was intended to be narrow, applying only to highly-paid workers with better benefits, more job security and greater upward mobility – not to entry-level office workers or retail supervisors spending most of their day on the cash register.

Today, far too few people are eligible for overtime pay. In 1975, 62 percent of full-time salaried workers were below the threshold and eligible for overtime. Today, only 7 percent of full-time salaried workers earn below the threshold. If you’re spending nearly all your time at work stocking shelves, working 60 hours per week making $25,000 per year, it’s simply not right that you don’t receive overtime pay.

That’s an economy out of balance. That’s the erosion of the American middle class. And that’s why President Obama called on the Labor Department to simplify and modernize the nation’s overtime rules. And today we’re answering that call.

Today, we’re announcing a final rule that will more than double the standard threshold to $913 per week or $47,476 a year. Plus, we’re indexing it to salary growth. So by 2020, we expect the threshold will be over $51,000 per year.

So who will benefit?

• Once in effect, 4.2 million workers will be newly eligible for overtime, 134,000 of them here in the state of Ohio. Nationally, more than half of them are women and more than half have a college degree. 2.5 million children will see at least one parent gain overtime protections or a raise to the new threshold.
• In addition, 8.9 million salaried workers who earn between the old threshold and the new one but who currently fail the duties test -- which means they should be earning overtime if they work more than 40 hours a week – will gain much needed clarity. Because they earn more than $455 and are paid a salary, they are sometimes denied overtime – often because they or their employers don’t understand or don’t know that they are eligible. Let’s say you’re a dedicated, salaried administrative assistant making $35,000 per year, who doesn’t supervise anyone and works 50 hours per week for a demanding boss. You’re overtime-eligible, but all too frequently you’re not getting overtime pay. We estimate that there are 750,000 workers just like that – they don’t get overtime pay even though they should. This rule will change that.
  • Overall, millions of workers across America will receive at least one of the following:
  • Some will see more money in their pockets – we estimate $1.2 billion in additional income for working people per year.
  • Some will get more time with their family. Because the most important family value is time with your family.
  • So some will get more money and some will get more time…and everyone gets clarity on where they stand, so they can stand up for their rights. Consider this clarity about your eligibility a kind of insurance policy: you’ll know that because you’re paid below the new threshold you can’t be asked to work more than 40 hours a week for free.

It’s also important to note that employers will have choice and flexibility in how they implement the rule. They can pay their workers overtime; they can raise salaries above the new threshold; or they can limit hours to 40 per week and continue paying their workers what they’re currently making.

This rule enjoys broad public support, not just from workers but also from businesses like Jeni’s who recognize that investing in their workers strengthens the bottom line, who believe that paying good wages is the smart thing to do and the right thing to do.

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This rule is the product of a robust and inclusive outreach process, including over a year of informal outreach followed by a full notice and comment rulemaking process. We carefully reviewed more than 270,000 public comments, which helped us strengthen the final rule.

• For instance, the business community overwhelmingly said: “Do not touch the duties test” -- so we didn’t.
• For the first time, because of feedback we got, the threshold will allow for non-discretionary bonuses. So if a worker makes $44,000 annually, but receives a non-discretionary bonus of $4,000, they will be above the threshold.
• We also provided additional time for implementation. When the Bush Administration made significant changes to the rule in 2004, including the creation of an entirely new duties test, they provided 4 months for implementation. We’re providing more than 6 months.

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We have 247 days left in the Obama administration – 247 days until the weekend I like to say – and we’re spending every one of those days doing everything possible to strengthen and grow the middle class.

That’s what today is about. Overtime – enshrined in the Fair Labor Standards Act – goes to the heart of what it means to be middle class. It stands for the idea that hard work should be rewarded…that if you work extra, you should get paid extra. Today, we expand overtime protections to millions more hard-working people – an important, powerful step toward ensuring that our growing economy is an economy that works for everyone. Thanks so much.

And now, join me in welcoming to the stage:

• Jeni Britton Bauer, the Founder of Jeni’s Ice Cream
• TeeShanee Johnson, a shopkeeper here at Jeni’s; and…
• The Vice President of the United States, Joe Biden.