NOTE: This story has been updated. Please see: Overtime Rule Extends Protections to 4 million+ Workers Says U.S. Dept of Labor – May 20, 2016
The Department of Labor recently sent out proposed rule changes and requests for comments that has the potential to affect employees who work in positions classified as executive, administrative, professional, outside sales, and computer employees.
The federal Fair Labor Standards Act (FLSA) guarantees workers a minimum wage and overtime pay at a rate of not less than one and one-half times the employees’ regular rate of pay for hours worked over 40 in a workweek. While these protections extend to most workers, the FLSA does include a number of exemptions. The Department of Labor proposes to update and revise the regulations issued under the FLSA implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees – also known as the “white collar” exemption. To be considered exempt, employees must meet certain minimum tests related to their primary job duties and be paid on a salary basis at not less than a specified minimum amount. Currently, that amount is $23,660 per year for a full-time worker. The proposed rule changes would increase that amount to $50,440 affecting an estimated 5 million workers nationwide.
A recent story in The Recorder — California’s leading publication for legal, business, and technology news, quotes Mark Thierman of Thierman Buck Law Firm saying that although employers shouldn’t have a difficult time complying with the new rules, raising the threshold will require the “…market [to] readjust …” From The Recorder:
The U.S. Department of Labor is proposing to more than double the salary threshold under which employees must be paid for overtime even if they’ve been classified exempt because they have management responsibilities or meet other exceptions. Moving the ceiling from $23,660 to $50,440 would affect 420,000 workers in California, according to the agency. The change would take effect next year.
In The Recorder’s article, employment lawyers weigh in on how this might affect wage-and-hour litigation. Consensus seems to point to a likelihood that employers will attempt to reclassify employees at certain salary levels. However, this doesn’t necessarily mean that wage-and-hour litigation will be impacted, though Thierman predicts:
… although misclassification litigation may decrease, lawsuits alleging forced off-the-clock work will increase as employers seek to avoid overtime costs.
It is important to remember that the proposed regulations are subject to a comment period, potential amendments, and even if enacted through the rulemaking process a change in presidential administration with differing viewpoints could alter their final form.
For the full story, visit The Recorder.
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