The Obama Administration has recently become more active in controlling the debate on exemptions to the US Fair Labor Standards Act overtime requirements.
In addition to prioritizing the federal minimum wage during the president’s second term, the Obama Administration has also asked the US Department of Labor to examine existing exemptions to laws that otherwise would require employers to pay overtime premium pay to certain workers.
On March 13, 2014, President Obama executed an executive order directing the Labor Secretary to address the salary threshold for applicability of common exceptions to overtime requirements under the FLSA. The focus of the executive order is “particularly for executive, administrative, and professional employees.”
While some salaried employees who earn more than $455.00 per week currently are exempt from the federal minimum wage and overtime requirements under certain circumstances, the Obama Administration seeks to increase that salary threshold in order to expand the number of salaried workers to qualify for overtime pay.
The Department of Labor has not yet requested public comment on the increased salary threshold, but one former White House economist has commented that Labor regulations could expand to include anywhere from five to ten million additional employees formerly classified as “exempt” from federal overtime pay requirements.
On March 12, 2014, Labor Secretary Thomas E. Perez went a step further, announcing that he intends to examine whether a complete overhaul of the exemptions is appropriate.
Given the changing environment in the context of labor laws, and the significant risk of employment-related litigation businesses must address each year, employers must be ever-mindful of these overtime requirements.
Collective actions involving the wage and hour provisions of the FLSA more than quadrupled between 2000 and 2012, presenting unique challenges for employers that are only magnified by a complicated economic environment.
As specific examples cited by the White House, employers hiring salaried convenience store managers and fast-food shift supervisors may find themselves having to account for overtime pay for these individuals in the near future.
