Coming to a store or restaurant near you soon! Supervisors will get overtime!
“Too many Americans are working long days for less pay than they deserve.” —President Obama on overtime pay http://t.co/Y4yThJ1K2g
— Barack Obama (@BarackObama) June 30, 2015
To be exempt from minimum wage and overtime requirements, currently a worker must perform certain duties (for example, supervise at least two other workers) and be paid a minimum salary of $455 per week ($23,660 per year). These are known as the white collar exemptions and they are categorized as Executive, Administrative, Professional, Outside Sales and Computer Professional. (Computer Professionals have to be paid a minimum of $27.63 per hour, in addition to meeting their duties test.)
The modest salary requirement was raised slightly in 2004 but hasn’t budged since. President Obama has now instructed the Department of Labor to increase that salary level to $50,440 in 2016 (the salary level for another exemption category referred to as “Highly Compensated Employees” is also being proposed to increase from $100,000 per year to about $122,000 per year). The DOL also proposes to add an escalator clause so that the salary level rises automatically over time, and it is also going to consider revising some of the duties tests.
What does this mean for employers?
This massive change in the law is not going to require congressional approval. All that is necessary is that the Department of Labor changes its rules and it is undoubtedly going to do that soon after the end of the 60-day rulemaking comment period.
The DOL estimates that 5 million workers will benefit from the change. And, if the agency tightens the duties tests, even more workers will lose the exemption. Every employer will need to review each of its positions that is currently classified as exempt to determine whether the position retains the exemption.