The U.S. Department of Labor published on Thursday its proposal to overhaul
the regulations defining overtime exemptions for white-collar employees
under the Fair Labor Standards Act.
The DOL calls the measure a long-needed modernization of the 50-year-old rules.
The benefits, according to department officials, include a boost to small businesses
as well as overtime pay for an additional 1.3 million low-wage workers.
Our proposal will strengthen overtime for the most vulnerable low-wage
workers and allow for stronger Department of Labor enforcement of this important
worker protection, said Secretary of Labor Elaine L. Chao.
Among other things, the Departments proposed regulations would raise
the salary thresholdbelow which workers would automatically qualify for
overtimefrom $155 a week to $425 a week. This increase of $270 a week
would be the largest since Congress passed the FLSA in 1938 and the first increase
since 1975. The DOL estimates it would increase the wages of 1.3 million lower-income
workers and reduce the number of low-wage salaried workers currently being denied
Other proposed changes include revising job duties required to qualify for
the exemption to "better correspond to 21st century workplace realities."
The DOL notes that the current regulations, written in 1949, mention job classifications
that no longer exist, such as key punch operators, straw bosses, leg men and
gang leaders. "Clarifying which job duties qualify for overtime pay will
help workers and employers easily determine overtime entitlement for millions
of workers whose status is currently unclear," according to the deparatment.
Updating these regulations is long overduethe types of jobs people
do and the skills they need have changed, but the regulations have not,
said Wage and Hour Administrator Tammy D. McCutchen. By recognizing the
professional status of skilled employees, the proposed regulation will provide
them a guaranteed salary and flexible hours.
Here are some details behind the proposal:
Minimum salary level increased. Under current rules, an employee earning
only $155 a week can qualify as a white collar employee not entitled
to overtime pay. The Departments proposal would raise this minimum salary
to $425 a week and guarantee overtime to:
- An employee working 50 hours per week managing a restaurant for $15,600
- A worker putting in 60 hours a week managing a department store for $18,000
- An employee working 42 hours a week supervising a machine shop for $17,000
Duties tests to rely on 'primary duty.' The proposed rule retains the
current short test reliance on an employees primary duty.
But it would eliminate the long-inactive long test rule restricting
exempt employees from devoting more than 20 percent of time in a workweek performing
- Executive duties. The proposed executive duties test has three requirements:
managing the enterprise; directing the work of two or more employees; and
having authority to hire or fire (or such recommendations are given particular
- Administrative duties. The proposal would replace the discretion
and independent judgment test, which has been the subject of confusion
and litigation, with a new test that employees must hold a position
- Professional duties. The proposal recognizes as exempt learned
professionals certain employees who gain equivalent knowledge and skills
through a combination of job experience, military training, attending a technical
school or attending community college.
The DOL further proposes to allow deductions from the salary of exempt employees
for full-day absences taken for disciplinary reasons, such as sexual harassment
or workplace violence. Currently, only hourly workers wages are subject
to such deductions. The proposal retains the salary basis rule prohibiting
deductions from exempt salary for partial-day absences.
The impact. According to the DOL, the proposed changes will bring these
- Increasing the minimum salary level will automatically guarantee overtime
to 1.3 million additional low-wage workers.
- Updating the duties tests will make entitlement to overtime more certain
for 10.7 million workers.
- Reducing regulatory red tape and litigation costs will free up resources
and stimulate economic growth.
- Bringing the rules into the 21st century and clarifying the outdated regulatory
language will help employees understand their rights and ensure they receive
their hard-earned pay. Employers will be better able to understand their obligations
and comply with the law.
U.S. Department of Labor