Update: President Obama Proposes Major Expansion Of Overtime

10/28/2016 | Articles & Alerts

Last year, we notified you of an impending change to the Fair Labor Standards Act regulations which establish the standards for determining whether an employee is entitled to overtime. At that time, President Obama announced that he intended to increase the minimum salary that an employee must be paid in order to qualify as “exempt” from overtime payments. Under current regulations, employers are not obligated to pay overtime to employees who qualify as exempt (i.e. executives, professionals, administrators) so long as those employees are paid a salary of at least $455.00 per week or $23,660.00 per year.

On June 29, 2015, President Obama announced his proposal to change the $455.00/week minimum salary to $970.00 a week, or $50,440.00 per year, by 2016. If the rule change is made, employees in roles such as managers, superintendents, and shift managers will be entitled to overtime pay for all hours actually worked in a week over 40 if that employee does not earn an annual salary of at least $50,440.00. The Labor Department reports that the change would render 5 million employees eligible for overtime, but other groups have estimated that the number of employees affected would be approximately 15 million. President Obama is attempting to make the change by executive order, without approval from Congress.

The proposed changes to the overtime rules will be open for public comment and likely will take months to finalize. If you wish to comment on the proposed rule change, you have 60 days to do so and can find a link to the Proposed Rule website where you can post your comment at www.dol.gov.

For questions or additional information contact Kimberly L. Russell, Esquire, 610-941-2541 or by email tokrussell@kaplaw.com.