In July, the United States Department of Labor (DOL) announced a new rule that would extend federal overtime protections to millions of “white collar” workers.
Not all employees are entitled to overtime pay. The Federal Labor Standards Act (FLSA) requires employers to pay employees one-and-a-half times their regular rate of pay for all hours worked over 40 in a workweek. However, certain “white-collar” workers are exempted from the requirements. This includes executive, professional, administrative, outside sales and computer employees. Under federal law, an employer does not have to pay an employee overtime if the employee is paid on a salary basis and meets certain minimum criteria related to their basic job functions.
Many employers take advantage of these exceptions at the expense of their low-paid employees. As a cost-saving technique, employers hire low-salaried workers and require them to work 50, 60, even 70 hours per week. Unlike hourly employees, the employer is not required to pay these salary-employees overtime.
As an important exception-to-the-exception, a “white-collar” worker may be entitled to overtime pay if their salary is less than a certain minimum amount, even if that employee meets all of the “exempt” criteria. Currently, the minimum amount is $455 per week ($23,660 per year).
This minimum salary threshold has not been updated since 2004 and does not reflect the current, post-recession economy. The DOL has proposed new regulations to raise this minimum amount and, in turn, extend overtime protections to millions more employees across the United States.
Currently, the only way to change the minimum salary amount is through the arduous federal rulemaking process. The DOL seeks to change that. Under the proposed rule, the minimum salary threshold would automatically adjust based on the realities of the economy. The DOL is proposing to set the salary threshold at the 40th percentile of weakly earnings of full-time salaried employees. For instance, if the new rules were implemented today, employees who made less than $951 per week ($49,452 per year) would be eligible for overtime pay under federal law—more than double the minimum amount under the current law.
According to the DOL, more than 21 million “white-collar” workers are exempt from the FLSA’s overtime protections. Updating the salary threshold will protect millions of low-paid, yet salaried, workers nationwide.
Hunter Pyle Law has handled numerous of cases involving employees who were not paid overtime wages. If you have questions about federal or California state overtime laws, please feel free to call Hunter Pyle Law for a free consultation at 510.444.4400 or email@example.com.