President Obama Orders DOL to Update Rules on Overtime Pay to Cover More Workers
President Obama recently directed his Secretary of Labor to update rules on overtime pay to cover many employees that do not receive overtime under the "white collar" exemption. Under current federal law, private-sector employers need not pay overtime to "executive, professional, or administrative" employees that earn a salary of $455 or more per week. There is rampant abuse by employers to use these exemptions to avoid paying overtime. For instance, an employer can classify an employee as "executive, professional, or administrative" even though she only spends 5% of her time performing supervisory duties. The employer can then work these employees 50 to 60 hours a week at $455 without paying any overtime.
The new rules will likely increase the per-week salary threshold to keep up with the realities of the modern workplace. $455 is below the poverty line for an individual supporting a family of four. In California, the threshold is $640 per week, and will increase to $800 in 2016.
The new rules will also likely set a minimum percentage of "executive, professional, or administrative" work to be performed in order to qualify for the exemption.
As corporations increase profits and wages remain stagnant with a stalled minimum-wage bill in congress, the DOL's rules will potentially raise the wages of millions of low-wage workers.
For questions regarding rules on overtime, please contact your labor law counsel.