President Obama Wants to Update Overtime Pay Rules
On March 13, President Obama announced plans to change overtime pay rules established through the Fair Labor Standards Act (FLSA) that have left "millions of low-paid, salaried workers without basic overtime protections."
According to the Administration, overtime and minimum guidelines set in the FLSA--which was originally passed by Congress in 1938--exempt employees who perform "executive, administrative, and professional" duties and earn above a certain salary threshold from overtime regulations. This is often referred to as the "white collar" exemption. However, that threshold has failed to keep up with inflation, only being updated twice in the last 40 years. Specifically:
- In 1975, the Department of Labor set the threshold below which white collar workers were entitled to overtime pay at $250 a week.
- In 2004, the threshold was set at $455 per week (or $561 in today's dollars).
The Administration argues that the current threshold is below today's poverty line for a worker supporting a family of four. Further, they point out that only 12 percent of salaried workers fall below the threshold that would guarantee them overtime and minimum wage protections (compared with 18 percent in 2004 and 65 percent in 1975).
Last week, the President issued a memorandum instructing the Secretary of Labor to update regulations regarding who qualifies for overtime protection, considering how the rules could be revised to:
- Update existing protection in keeping with the intention of the FLSA.
- Address the changing nature of the American workplace.
- Simplify the overtime rules to make them easier for both workers and businesses to understand and apply.
A White House fact sheet claims that this policy change could "benefit millions of people who are working harder but falling further behind. The Fair Labor Standards Act protects over 135 million workers in more than 7.3 million workplaces nationwide."
If and when overtime pay regulations will be updated is unknown at this point, but the proposed changes have received a mixed response. Some organizations believe stronger overtime pay protections would benefit workers and the economy, while others question the impact on small businesses and other organizations that are already struggling financially.
In particular, I would encourage K-12 talent managers to keep an eye on this proposal as updates to overtime rules could affect your organization's employees, budget, HR policies, etc. I will do my best to keep you all apprised of any news updates and/or changes to the law.
Read more about the FLSA, or if you have questions or concerns, contact the Department of Labor at 1-866-487-9243. You can also visit www.wagehour.dol.gov.