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White House Directs DOL to Update FLSA Overtime Provisions
Practical Law Legal Update 6-560-7825 (Approx. 4 pages)
White House Directs DOL to Update FLSA Overtime Provisions
by Practical Law Labor & Employment
| Law stated as of 24 Sep 2019 • USA (National/Federal) |
The White House has announced that President Obama is expected to sign a Presidential Memorandum directing the Secretary of Labor to revise the Fair Labor Standards Act's (FLSA) overtime provisions to simplify the regulations and expand the number of workers who qualify for overtime protection.
On March 13, 2014, the White House announced that President Obama is expected to sign a Presidential Memorandum directing the Secretary of Labor to revise the FLSA overtime provisions to simplify the regulations and expand their coverage to increase the number of workers entitled to overtime protections.
The Presidential Memorandum instructs that the regulations should be updated to:
- Reflect the intention of the FLSA in creating these protections.
- Address the changing nature of the workplace.
- Make them easier for employers and employees to understand and apply.
Currently, the FLSA's provisions exempt workers from overtime and minimum wage protections if they:
- Earn salaries above $455 per week.
- Fall within a category of employees that are exempt, including the common exemptions for:
- administrative employees;
- executive employees;
- professional employees;
- computer professionals;
- outside sales employees; and
- highly compensated employees.
With these revisions, the White House seeks to increase the threshold amount to account for inflation, since the regulations have not been updated since the 2004 revisions under President Bush.
It asserts that the current threshold amount of $455 per week is:
- Equivalent to $561 per week in today's dollars.
- Below the poverty line for a worker supporting a family of four.
- Allowing for only 12% of salaried workers to qualify for the law's minimum wage and overtime protections, whereas:
- 18% of salaried workers qualified in 2004; and
- 65% of salaried workers qualified in 1975.
Employers subject to the FLSA should keep track of these impending changes to ensure that they are in compliance with the law.
Update: President Obama signed the Presidential Memorandum on March 13, 2014.
Update: On September 24, 2019, the DOL announced its final overtime rule, updating minimum salary and compensation levels for certain exemptions effective January 1, 2020. The agency also formally rescinded its 2016 final overtime rule, invalidated by a federal district court before its December 1, 2016 effective date. For more information on the DOL's 2016 final rule, subsequent litigation, and the 2019 rulemaking, see Practice Note, Latest Developments: DOL Rulemaking to Increase the Minimum Salary for White Collar Exemptions Under the FLSA.