On June 18, 2014, Senate Democrats introduced a bill to amend the Fair Labor Standards Act and raise the salary threshold necessary to qualify for three common exemptions to the FLSA's minimum wage and overtime requirements. The amendment is designed to increase the number of salaried employees who are eligible for overtime pay.
The Fair Labor Standards Act requires that employers pay most employees at least the minimum wage and overtime pay at a rate of not less than one and one-half times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. The FLSA, however, contains various exemptions from these requirements, including exemptions for administrative, executive and professional employees.
In order to qualify for the administrative, executive or professional exemption, employees generally must satisfy certain requirements with respect to their job duties (the "duties test"). For example, an administrative employee must demonstrate that: (1) his or her primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and (2) his or her primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. In addition, employees can only qualify for these exemptions if they are paid on a salary basis at no less than $455 per week.
The proposed legislation – the Restoring Overtime Pay for Working Americans Act – would raise the $455 per week salary threshold over the next three years, more than doubling it (to $1,090 per week) by the third year. In addition, the proposed legislation also provides that in order to meet the duties test for the administrative, executive and professional exemptions, the employee cannot spend more than 50% of the employee's work hours on tasks that are not exempt. For example, an employee may qualify for the executive exemption if his or her primary duty is managing a business or managing a customarily recognized department or subdivision of the business. But under the proposed legislation, a manager who performs other duties in addition to his or her management duties (for example, a store manager who spends a significant portion of his or her time on sales or customer service) may not qualify for the exemption unless he or she spends at least 50% of the time performing actual management tasks.
Given the divided Congress, this legislation is not likely to proceed to enactment anytime soon—but it is a sign of where the FLSA could possibly move in the future.