President Obama announced a proposed rule to “modernize” and expand overtime protections for workers on March 13.
The administration signaled that it would like to expand overtime protections through a U.S. Department of Labor rule change that would raise the salary threshold defining which workers are exempt from overtime and potentially evaluate some of the current duties tests.
The president signed a presidential memorandum on March 13 directing DOL to propose revisions to the existing overtime protections under the Fair Labor Standards Act and simplify the overtime rules to make them easier for both employers and employees to understand and apply. Full details of the change will be worked out during a comment period that could last more than a year, but will almost certainly take months.
Expanding overtime protections to additional salaried administrative, professional and executive employees could have an impact on a wide range of workers who currently are considered exempt, including fast food shift supervisors, convenience store managers and loan officers.
Proponents of reforming the overtime laws have long argued that many workers currently classified as overtime exempt under existing regulations should rightfully be earning overtime. Currently the FLSA salary threshold for employees to be classified as overtime exempt is $455 per week, or less than $24,000 a year. A worker that earns $455 or higher may work more than 40 hours in a week without earning overtime pay (time and one half an employee’s regular pay) under current regulations. Employees must satisfy both a salary basis test and a duties test to legally be classified as exempt from the FLSA.
The president also pledged to seek input from both businesses and their employees to simplify the system for everyone, although he acknowledged that “with any kind of change like this, not everybody is going to be happy.”
Secretary of Labor Thomas Perez followed up the president’s pledge in remarks at the 2014 SHRM Law and Legislative Conference on March 18. Perez indicated that both the duties and the salary tests that determine eligibility for overtime will be considered in the overtime rulemaking proposal DOL will craft following the comment period and an “ambitious program of outreach.”
Perez made a strong push for employers to provide feedback to DOL to inform the pending rule changes, but declined to give a specific time frame on when stakeholders could expect to see a draft of any overtime rule changes.
“What we’re going to do is take the time that is necessary to hear from everyone, hear from every stakeholder and construct a proposed rule that is fully informed,” he told conference attendees.
DOL is legally allowed to issue regulations and interpretations of the FLSA. Historically it has often accomplished that through documents from the Wage and Hour Division administrator, a position that has been vacant for years. The president’s nominee David Weil is still waiting for Senate confirmation.
Some states already have higher salary thresholds for overtime, including California at $640 a week and New York at $600 a week. Both will also increase in the next few years.
For a full discussion of current duty and salary tests, and full news coverage of the administration’s efforts to modify the existing rules, go to http://hr.complianceexpert.com/ (subscription required).