Proposal to Strengthen Overtime Protection

Minimum Salary Level Increased: Under current rules, an employee earning only $155 a week can qualify as a “white collar” employee not entitled to overtime pay. The Department’s proposal would raise this minimum salary to $425 a week—an increase of $270 a week and the largest increase since the Fair Labor Standards Act was passed by Congress in 1938. The proposed changes would guarantee overtime to:

§                     An employee working 50 hours per week managing a restaurant for $15,600 per year.

§                     A worker putting in 60 hours a week managing a department store for $18,000 per year.

§                     An employee working 42 hours a week supervising a machine shop for $17,000 per year.

Duties Tests Rely on “Primary Duty”: The proposed rule retains the current “short test” reliance on an employee’s primary duty. The proposal would eliminate the long-inactive “long test” rule restricting exempt employees from devoting more than 20% of time in a workweek performing non-exempt duties.

§                     Executive Duties: The proposed executive duties test has three requirements: managing the enterprise; directing the work of two or more employees; and having authority to hire or fire (or such recommendations are given particular weight).

§                     Administrative Duties: The proposal would replace the “discretion and independent judgment” test, which has been the subject of confusion and litigation, with a new test that employees must hold a “position of responsibility.”

§                     Professional Duties: The proposal recognizes as exempt “learned professionals” certain employees who gain equivalent knowledge and skills through a combination of job experience, military training, attending a technical school or attending community college.

Employees Treated More Equitably: The Department proposes to allow deductions from the salary of exempt employees for full-day absences taken for disciplinary reasons, such as sexual harassment or workplace violence. Currently, only hourly workers’ wages are subject to such deductions. The proposal retains the “salary basis” rule prohibiting deductions from exempt salary for partial-day absences.

Impact of Proposed Changes

1.3 Million Additional Low-Wage Workers Gain Overtime Protections: Increasing the minimum salary level will automatically guarantee overtime to 1.3 million additional low-wage workers.

Overtime Protections Strengthened for Additional 10.7 Million Hourly Workers: Updating the duties tests will make entitlement to overtime more certain for 10.7 million workers.

Enhance Economic Growth: Reducing regulatory red tape and litigation costs will free up resources and stimulate economic growth.

Rules Easier to Apply and Enforce: Bringing the rules into the 21^st century and clarifying the outdated regulatory language will help employees understand their rights and ensure they receive their hard-earned pay. Employers will be better able to understand their obligations and comply with the law. The Labor Department will be equipped to more vigorously enforce the law