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The President orders salaried workers eligible for overtime

March 14, 2014

Yesterday, President Obama directed the Secretary of Labor to draft new regulations that will require the payment of overtime wages to many white collar employees who presently do not receive overtime pay. A copy of the directive can be found here

The precise scope of the new regulations is unknown at this time but is expected to greatly restrict the number of employees who qualify for an overtime exemption. These restrictions are expected to be in two forms – new limits on both the duties test and the salary basis test.

Under the FLSA, the duties test requires that certain exempt employees have executive, administrative or professional duties. The salary-basis test requires employers to pay a guaranteed salary at or above a specific minimum regardless of the number of hours worked in a week and not subject to reduction except under very narrowly defined circumstances. The President’s directive describes the white collar exemptions as outdated. The Department of Labor will now be responsible for preparing new regulations that may provide overtime to millions of employees currently exempt from receiving it.

There is nothing you need to do at this time if your exemptions are currently compliant with existing law. We will closely monitor these developments and keep you apprised. If you have any questions or need assistance in reviewing your overtime pay practices, please contact any of our Labor and Employment attorneys.