US Department of Labor Releases Proposed Changes to Overtime Laws

by Michelle R. Ferber and Ben McDonald

For the first time since 2004, the Department of Labor is proposing widespread overtime expansions that would offer far more salaried American workers to be eligible for overtime pay.  At the direction of President Obama, Secretary Thomas Perez of the Department of Labor has submitted a proposal to increase the salary threshold that serves as the upper limit for workers required to receive overtime pay.

The Fair Labor Standards Act (FLSA) currently offers an exemption from minimum wage and overtime requirements for various positions categorized as executive, administrative, professional, outside sales, as well as some occupations in the computer field.  As the regulations stand now, an employee who fits into one of the categories above and who makes more than $23,660 per year is not required to receive overtime pay.  Under the proposed changes, that salary level is increased dramatically to $50,440 per year.

This means that any employee in the fields noted above who makes $50,440 or less and who meets certain job duties-related tests, will automatically earn time-and-a-half pay for any hours worked over a standard forty hour work week.  The proposal also includes a provision that automatically updates the salary threshold that would prevent that threshold from becoming outdated, as seems to have occurred between 2004 and the present.

If these proposed revisions of law go into effect, they will likely have a profound effect not only in how employees are compensated, but also in how California employers navigate the regulations to be in compliance with both Federal and California labor laws.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.