Overhaul of FLSA Overtime Rules May Mean a Raise for White Collar Workers

Last week, President Obama signed a memorandum directing the US Secretary of Labor to begin the process of updating the Fair Labor Standards Act’s (FLSA) overtime rules to better fit today’s economy.

Under the FLSA, workers who are paid hourly wages or who earn below a certain salary threshold are generally protected by minimum wage and overtime regulations. However, the FLSA exempts from minimum wage and overtime pay requirements certain groups of employees who earn above a certain salary threshold. One of the most commonly used exemptions is for “executive, administrative and professional” employees, the so-called “white collar” exemption. Workers who perform “executive, professional or administrative” duties and earn above the current salary threshold are not entitled to overtime pay.  Today, 88 percent of salaried workers are ineligible for minimum wage and overtime protections because they fall within the white collar exemptions.

One goal of the President’s directive is to raise the salary threshold for the “executive, administrative and professional” exemption. The current salary threshold, set in 2004, is $455 per week. That threshold has failed to keep up with inflation and even makes it possible for employers to pay workers less than the minimum wage per hour. It is also anticipated that the forthcoming FLSA regulations will include updated duties and position requirements for the “executive” and “computer professional” exemptions. The regulatory process could take more than a year. Employers can participate in the process by submitting comments to proposed rules.

We’ll post links to proposed rules and commentary deadlines in the coming months.

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