Click here for pdf
On March 13, 2014, President Barack Obama signed a Presidential Memorandum taking further executive action towards increasing the number of employees eligible for overtime pay under the Fair Labor Standards Act (FLSA). Click here to view the “Presidential Memorandum -- Updating and Modernizing Overtime Regulations” and click here to view the “FACT SHEET: Opportunity for All: Rewarding Hard Work by Strengthening Overtime Protections.”
Currently under the FLSA, non-exempt employees are entitled to their hourly rate and overtime (at rate of time and a half of their hourly rate) for any hours worked beyond 40 in a work week. The FLSA provides that some employees are exempt from overtime compensation if their job duties include certain responsibilities that establish them as “executive, administrative, and professional employees,” and they are paid a salary of at least $455.00 a week.
This announcement is part of a larger plan to increase wages on numerous fronts, as it follows the President’s initiatives to raise the minimum wage, the minimum tipped wage, and proposed budget increases for the Department of Labor (DOL) to enforce the FLSA and other laws. With his action yesterday, the President has directed Department of Labor Secretary Thomas E. Perez to formulate new regulations which would increase the number of employees eligible to receive overtime nationwide, stating that “[i]f your salary is even a dollar over the current threshold [$455.00 per week], you may not be guaranteed overtime.” The threshold was last raised from $250.00 per week to the current level by President George W. Bush in 2004.
President Obama’s mandate to the Labor Secretary also instructs to simplify and update the regulations. Specifically, the President’s directive was to “propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the [FLSA]; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.”
Although current administration officials have offered that the new cap should be increased to anywhere from $550.00 per week to $970.00 per week, this executive order does not include a particular threshold or other details, leaving the Labor Secretary to provide the specifics on how to implement the new policy over the balance of the President’s term in office. Click here to view the Washingon Post article “Obama’s expected change to overtime rules would make more eligible for extra pay.”
Once the DOL proposes new overtime regulations, they will be published and a public comment period will follow, which could include hearings. Employers must be prepared to step forward and take advantage of any opportunity to be heard during the public comment period. At the same time, employers need to remain vigilant in adhering to existing wage and hour laws, as this Administration has made it crystal clear that employee compensation and classification as “exempt” from minimum wage and overtime is at the forefront of its executive agenda.
For more information on the matters discussed in this Locke Lord QuickStudy, please contact one of the authors.