President Obama: In Favor of Expanding Overtime Laws
In March 2014, President Obama issued the Labor Secretary an executive order to rewrite the overtime exemption rules under the Fair Labor Standards Act (FLSA). With these new rules on the immediate horizon, it is important to know what is likely to change and what critics and proponents are saying.
The two main changes are:
The minimum salary. Currently, the minimum salary an employee must be paid to be exempt from overtime pay is $455 per week or $23,660 annually. Analysts predict that the Labor Department will nearly double that figure to between $42,000 and $52,000. This move will make millions of individuals immediately eligible for overtime pay.
- The duties test. The FLSA’s “white collar” duties test is also expected to be modified significantly. Presently, employees must meet both the salary test and a primary duties test to qualify for white collar exemption status. While specifics of the changes are not currently know, it is likely that they will reduce the number of employees who qualify for white collar overtime pay exemptions.
Supporters of these moves feel that it will maintain the spirit of the law, which is that lower-paid, non-supervisory workers get a wage premium that is 1.5 times their hourly wage for working more than 40 hours a week. Their hope is that either the workers will get the pay deserved for extra hours, or employers will choose to create new jobs and hire new employees.
Business groups are critical of the resultant higher payroll costs and predict that setting the standard for the entire country will not work. Others assert that reclassifying employees as hourly rather than exempt could affect their benefits and schedule flexibility.
If implemented, these rules will likely increase expense for many companies as well as necessitate operational changes. However, there are still a good number of steps that the Obama administration and Labor Department must go through before these reforms will be enacted.
Should you have any questions related to overtime pay, please contact us online or call our offices at (561) 653-0008. At Scott • Wagner and Associates, P.A., our approachable and knowledgeable attorneys are dedicated to providing skilled legal representation for your unique situation.