So, by now, you’ve likely read the news, first reported on Wednesday night by The New York Times reporters Michael Shear and Steven Greenhouse that “Obama Will Seek Broad Expansion of Overtime Pay”.
Messrs. Shear and Greenhouse indicated that, yesterday, President Barack Obama was to the direct the U.S. Department of Labor to “revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as ‘executive or professional’ employees to avoid paying them overtime.”
Possible targeted changes to the FLSA
The New York Times article suggested that President Obama would call on the DOL to raise the minimum salary level for employees to qualify for an overtime exemption.
Currently, to fit under either the “executive” or “administrative” exemptions to the Fair Labor Standards Act, among other things, the employee must make at least $455 per week in salary. Raising that number would render fewer employees “exempt,” thus increasing the pool of overtime-eligible employees.
Additionally, Messrs. Shear and Greenhouse report that “the new rules could require that employees perform a minimum percentage of ‘executive’ work before they can be exempted from qualifying for overtime pay.” The current rules contain more amorphous standards.
A directive from the President that’s long on newspeak and short on specifics
With all of this buildup, yesterday, the White House issued a “Presidential Memorandum” entitled “Updating and Modernizing Overtime Regulations.” The memo contains nothing as specific as reported in The New York Times. Instead, it contains an overview of the Fair Labor Standards Act followed by a vague directive to the DOL:
“I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.”
Quite frankly, although this is a general edict, I’m all for streamlining and simplifying an arcane law that has become a nightmare for businesses and their employees to comprehend.
Don’t expect swift change.
How, specifically, the FLSA may change, is less than clear. What is clear; however, is that this process will take a lot of time. If the DOL wishes to amend the regulations supporting the FLSA, it must first propose rule changes, then entertain a public comment period, then, as necessary, tweak the changes, before finally implementing them.
Bottom line: don’t expect much in the way of change to the FLSA anytime soon.
What can employers do now to protect themselves?
However, news like this, together with the growing trend in wage-and-hour claims, should serve as a wakeup call to employers. Consider taking some proactive steps, such as a retaining outside counsel to perform a wage-and-hour audit, to spot issues now, limit exposure, and reduce the risk of future litigation.
UPDATE: The SHRM A-Team has released this update on the proposed changes to the FLSA.