White Collar Employees to Get Broader Overtime Rights

President Obama has ordered the U.S. Department of Labor (DOL) to narrow regulations that exempt some professional, administrative, and executive employees from a right to overtime under the federal overtime law known as the Fair Labor Standards Act.  President Obama’s order means that the DOL will jump-start a rule-making process, including public drafts and comments, which likely will span the next one to two years;  see Presidential Memorandum Updating and Modernizing Overtime Regulations (March 13, 2014). The Fair Labor Standards Act exempts certain professional employees from being paid overtime, though employers can always choose to so pay.  29 U.S.C. 213(a)(1).  To define this employer’s free pass, the DOL since 2004 states that

(1)   exempt professional employees must earn at least $455 per week,

(2)    and have “primary duties” in the professional, administrative, or executive fields.  DOL Regs., 29 CFR 541.000 et seq.

The issue is complicated, but a short primer can be found at the DOL Web site. President Obama seeks to simply the rules as well as narrow them.  More professional employees will have a right to overtime pay.  As the President states in his Memorandum, the current DOL rules “have not kept up with our modern economy.  Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage.” Some speculate that the DOL will raise the exemption’s required weekly salary, which right now must be at least $455 per week, or $11.37 per hour.   The “primary duty” test currently in force and noted above, may be simplified and narrowed, as reports the New York Times.  Some argue the weekly minimum salary for this exemption should be $1,000, which is far higher than the greater minimums in effect in New York and California under state laws.  See id. The rule making process will take at least a year.  That being said, President Obama in his March 13, Memorandum clearly intends the DOL to have millions of more employees gain overtime rights.