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New Overtime Rules: Changes are Coming

The Fair Labor Standards Act (FLSA) governs federal minimum wage and overtime pay.  Currently, employees covered by the FLSA must be paid at least the federal minimum wage, and in most cases, overtime for all hours worked in excess of 40 in any work week.

FLSA regulations also provide exemptions from federal minimum wage and overtime requirements for "white collar employees," defined as salaried "executive, administrative and professional" employees who satisfy the minimum earnings and job duties tests.

The United States Department of Labor has been working on proposed regulations intended to make fewer people exempt from overtime, in accordance with the mandate from President Obama to expand overtime protections and raise the minimum wage.  These new regulations could make millions of workers who previously were categorized as "exempt" eligible for overtime pay.

It is unclear at this point exactly what will be included in the proposed changes, which are expected to be released soon.  However, among the changes that are expected to be proposed is a provision raising the salary threshold for white collar employees -- the minimum an employee must make to qualify for one of the white collar exemptions to the FLSA--which is currently $23,660 a year.

Another anticipated change is a move to a qualitative standard such as currently in use in California, which requires workers spend more than 50 percent of their time on tasks that are exempt from minimum wage and overtime requirements.  Under current federal law, the worker's "primary duty" is considered in making the determination.  Accordingly to many employment lawyers, this change alone will likely lead to a flood of litigation, just as it has in California.

The impact of making more workers eligible for overtime is unclear. Many argue that it will actually hurt the labor force because it will force employers to lay off workers rather than pay overtime or increased wages. Others argue that it will simply mean more money for workers to spend, thus helping the economy.

Either way, change is coming.  Keep a close eye on these very important changes!