Obama Plan More Than Doubles Overtime Exemption Qualification

President Obama last night unveiled his long-awaited proposed overtime exemption rule, enabling those who earn up to $970 a week, or $50,440 a year, to be eligible for time-and-a-half when working more than 40 hours in a week. The current minimum salary exemption (free from overtime) is $455 a week, or $23,660 a year.

“Right now,” the president’s announcement in The Huffington Post notes, “too many Americans are working long days for less pay than they deserve.” The change would restore the threshold in purchasing power to where it stood in 1975, the presidential op-ed piece claims.

The rule is part of the administration’s power under the overtime provisions of 1938’s Fair Labor Standards Act (FLSA), but will no doubt be challenged in court anyway.

The rule must still undergo the normal rulemaking process, including being published in the Federal Register and being opened for public commentary, and most likely will not take effect before 2016.

[This morning the Department of Labor (DOL) published a Notice of Proposed Rulemaking (NPRM) on the overtime proposal, but you have to scroll to page 8 to find the figures Obama refers to.]

If you own or operate a small to medium-sized business, managing all your employees plus meeting federal labor laws and regulations can be daunting, especially with new rules being issued all the time. To help you understand your rights and responsibilities in every facet of running a business, please order a copy of Personnel Concepts’ All-On-One HR Compliance Program for Small Businesses.

NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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  • Mary Lambert says:

    I don’t totally disagree with the new proposal but I think it’s too aggressive. Supervisors, professionals and other working people that have a significant latitude of true independent judgment that affects policies and processes throughout the company should truly be exempt but I don’t agree that exempt should receive OT. Exempt people have the latitude of getting their job done and having free time. The key to being exempt is the ability to get the work done, with no direction. So if one week I can get all my work done in 20 hours – good for me. However, if the next week, I’m working 70 hours….well, that’s why I’m exempt. I believe that it is the people making less than 45K that we need to really look at.

  • Moran says:

    Anyone considered non-exempt should receive time and one-half over 40 hours worked. Period. No salary caps whether it’s $23,660 or $50,440.

    If an administrative assistant or meeting planner (non-exempt) has to work weekends to set up an out-of-state, week long company meeting, plus worked their normal 40 hours while in the office, they should be paid for that time, including the business travel/time spent traveling and extra (over 8) hours worked per day. Even though non-exempts can be salaried, not all companies pay as they should. They consider this a “developmental opportunity” for growth, which is inaccurate. Not all companies utizilize comp time anymore either, so employees cannot “make up the weekend time” which is also an unfair expectation and practice.

    If you are a non-exempt, it means that you are not privileged to receive stock, long-term stock incentives, higher bonus percentage payouts (6% for non-exempts; 35%+ for exempts/senior managers), various leadership awards and cannot even be considered for various “star awards” within your own company or various organizations (you need to be Director level.) Since non-exempts do not receive as many perks and perquisites as exempt employees do, yet work eqTherefore, you should be paid for every hour you work.

  • Moran says:

    Continuation from prior comment:

    Since non-exempts do not receive as many perks and perquisites as exempt or sales employees do, yet work equally hard and long hours, non-exempts should be paid for EVERY hour they work for their employer.

    My overall belief is that there should NOT be any type of salary maximum/cap to determine who and who does not receive Overtime pay.


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