President Obama Plans to Expand Overtime Pay Requirements

In early March, President Obama announced that he yet again intends to use his pen by issuing an executive order to extend overtime protections to what the administration estimates as millions of workers.  Currently, employers may treat certain employees as exempt from overtime pay if they can fit within certain specific exemptions of the Fair Labor Standards Act.  These exemptions, whereby an employer classifies employees as executive, administrative or professional workers, excuses employers from paying overtime to salaried workers that fit within these defined categories if those salaried workers earn a minimum of $455 per week. 

The administration points out that these so called “white collar exemptions” deny many American workers who work 50 and 60 hours a week the protection of the overtime laws which otherwise require employers to pay workers 1½ times their hourly wage for all hours worked beyond 40 hours in a week.  The administration further points out that it has been several years since the minimum threshold for the white collar exemptions have been pegged at $455 per week.  On an annual basis, this weekly wage equates to approximately $24,000 per year.  President Obama has ordered the United States Department of Labor Secretary to devise a plan and draft new regulations that would expand the number of workers eligible for overtime pay.  Although no specific new threshold has been proposed, it has been calculated that, if the threshold had been tied to inflation, the minimum threshold for employers to claim the white collar exemption for employees today would be $1,000 per week, or more than double the current level. 

These revised regulations, if and when they are implemented, are sure to impact thousand of businesses and millions of employees across the United States.  Stay tuned.

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