Obama Administration Proposes Raising Minimum Pay for Overtime Exempt Employees

Posted by Sean P. CecilJun 30, 20150 Comments

The federal government last night announced proposed new Fair Labor Standards Act (FLSA) regulations which would double the salary threshold for overtime exemptions commonly known as the "white collar" exemptions or "EAP" (Executive, Administrative, Professional) exemptions. The previous rule, from 2004 during the Bush administration, required that employers could not claim overtime exemptions for salaried employees unless (among other things) the employee was compensated at least $455/week ($23,660/year). The new proposed regulation would mandate that workers claimed as exempt must make at least $921/week.  This change will make millions of American workers eligible to receive overtime pay (150% regular hourly rate) for hours worked in excess of 40 in a week.

This is an important and long-awaited update to what had become an almost farcical requirement originally intended to exempt high paid executives. In reality, the exemptions often were mis-used for low paid "managers" at convenience stores and fast food restaurants, who are "promoted" to manager, given a fairly middling salary, and expected to work 70 or 80 hours a week, mostly doing menial tasks of the sort required of regular employees who would otherwise earn overtime. 

The new regulation will guarantee that overtime-exempt salary employees are actually making a decent living salary in return for long hours worked, and should boost employment numbers as it becomes more efficient to hire new employees rather than depending on low-paid "managers" to do the work of two employees without overtime. 

Our law firm has successfully handled lawsuits on behalf of workers who were denied overtime, and is available for consultation and representation for workers with FLSA and other employment law issues.