Nearly 5 million salaried workers nationwide would become eligible for overtime pay, including 420,000 in California, under regulations proposed Tuesday by President Barack Obama.

White-collar employees earning up to $970 a week, or $50,440 a year, would be due time-and-a-half pay if they work more than 40 hours in a week.

The new rules, which can be enacted without congressional approval, would affect a broad swath of occupations including fast-food managers, office workers, loan officers, insurance adjusters, janitorial supervisors and retail clerks.

In California, salaried workers earning up to $720 a week, or $37,440 a year, are currently eligible for overtime pay under state law, the highest threshold in the nation.

Several other states, including New York, also have thresholds higher than the current federal level. But many states adhere to the federal standard, which has not been updated since 2004. Under that regulation, salaried workers earning over $23,660 or $455 per week – which is below the poverty line for a family of four – are exempt from overtime rules.

“Overtime is a pretty simple idea,” Obama said at a White House ceremony announcing the move. “If you have to work more, you should get paid more.”

The proposal is part of a broad push by the administration to improve benefits for low-income and middle-class families. Besides the Affordable Care Act, which expanded medical insurance to millions, the president has proposed raising the minimum wage to $10.10 an hour and making two years of community college free for most students.

The overtime proposal was prompted in part by what labor officials say is a widespread practice by employers to re-classify hourly workers, who must always be paid overtime, as salaried “managers,” to avoid paying for extra hours.

The current standard, Obama noted, can result in compensation below the equivalent of the hourly minimum wage.

“It doesn’t matter if what you do is mostly physical work like stocking shelves,” he said. “It doesn’t matter if you’re working 50 or 60 or 70 hours a week – your employer doesn’t have to pay you a single extra dime.”

Although Golden State salary earners would only be affected by the new rule if they make between $720 and $970 a week, Californians still represent a larger proportion of those affected by the proposal than any other state: 8.9 percent.

Irvine attorney Michael Tracy has brought dozens of overtime cases against Orange County companies in the past decade. He has charged the companies – ranging from restaurant chains such as Taco Bell to a swath of mortgage firms – with misclassifying workers as managers.

“Typically companies will call people ‘team leaders,’ or ‘project leaders,’” he said. “But they spend less than half their time managing one or two other people.”

The new regulation, Tracy added, will mean fewer such cases. “Hopefully, they won’t have to hire attorneys, because the employers will now pay overtime.”

The rule is subject to a 60-day public comment period, and the administration could decide to modify it before finalizing it.

National restaurant and retail groups strongly condemned the proposal. Given the fierce opposition from business, lawsuits could delay the rule. The Republican-led Congress also could attempt to overturn it.

Reaction among Orange County businesses varied.

Russ Bendel, president and chief executive of The Habit Restaurants, an Irvine-based burger chain with 101 California outlets, said the proposal would not affect his company because “we pay all our management people an hourly wage. That’s better for them. If someone works more than eight hours a day or 40 hours a week, they deserve overtime.”

However, Mario Marovic, an owner of eight Orange County restaurants including the Matador Cantina in Fullerton, called the new rule “ridiculous government interference.”

“Employees want to be on salary because that gives them flexibility,” he said. “Say they tend bar for 30 hours a week, and do one day of administrative work. They can do that admin work at home. But if this rule goes through, we have to clock them. We’ll be asking why did that take you five hours instead of three hours?”

Advocates argue the new rule will benefit business. “When middle-class people have more money in their pockets, they spend it,” said Julio Perez, executive director of the Orange County Labor Federation. “They’ll eat out and buy things for their homes. Everybody prospers.”

Labor Secretary Tom Perez estimated the change would add as much as $1.3 billion in wages for many new overtime-eligible workers. At the same time, he added, some employers may choose to hire new full-time or part-time workers to do the overtime work salaried workers once performed.

The White House said 56 percent of those who would benefit in the first year are women, and 53 percent have a college or advanced degree.

Contact the writer: mroosevelt@ocregister.com; on Twitter @MargotRoosevelt