Taking Care of Business and Working Overtime

By: Elizabeth Driscoll

Under the Fair Labor Standards Act (“FLSA”), employers must pay overtime pay to employees covered under the FLSA if the employee has worked more than forty hours in a single workweek.[1]  As with any law, there are exceptions to the rule.  Two years ago, President Obama directed the Department of Labor (“DOL”) to update the FLSA regulations for overtime protections relating to White Collar workers.[2]  By July 6, 2015, the DOL completed its revisions and published the Notice of Proposed Rulemaking, which allows concerned parties to analyze the Notice and submit comments on the proposed rule.[3] All of these comments were collected within a 60-day period, and the DOL has since been reviewing them before releasing its final rule.[4]

The new overtime rule would broaden the definition of who is entitled to overtime protections, allowing a substantial increase in the amount of workers who are eligible for overtime pay.[5] Under the current definition, whether an employee is covered under the FLSA is contingent upon what the individual’s “main duties are, not how much time they spend on other tasks.”[6]  The proposed rule hopes to change the coverage from a primary-duties test to the California Test.[7]  Following California’s overtime law, an employee would be eligible for overtime pay even if he or she carried out tasks that were not directly related to his or her main duties.[8]  Additionally, the new overtime rule would set the standard salary level for exemption at the 40th percentile.[9]  The DOL believes that setting the standard at this percentile is appropriate because it “minimizes the risk that employees legally entitled to overtime will be subject to misclassification based solely on the salaries they receive, without excluding from exemption an unacceptably high number of employees who meet the duties test.”[10]

In anticipation of the new rule, employers are likely to take detailed descriptions of all the tasks that each of their employees carries out on a daily basis.[11]  Because of the expansion of the overtime rule, some employers and employment attorneys are preparing to combat potential lawsuits, expecting the amount of claims to almost double.[12]  Knowing the daily routines for employees will help employers classify their workers as hourly or salaried to determine who will no longer be exempt from the overtime protections.[13]  Furthermore, it may enable them to renegotiate salaries and redistribute duties to different workers to remain within the new parameters.

From the employees’ point of view, the expansion of overtime protection will greatly benefit women, minorities, and low-level workers.[14]  The Economic Policy Institute has concluded that the new rule will benefit an estimated 13.5 million salaried workers by either allowing workers to be reclassified into positions that are not exempt from the provision or strengthening an already protected worker’s claim.[15]  The DOL’s new salary standard remedies the widespread noncompliance and misclassification that has existed since the primary-duties test came into effect.[16]  With a raised threshold, the FLSA will again have the ability to provide overtime protections to employees who are in need of them, fulfilling its obligation to protect those who do not have control over their work time or tasks.[17]

[1] Wage & Hour Div., Overtime Pay, Dep’t of Labor, http://www.dol.gov/whd/overtime_pay.htm (last visited Mar. 6, 2016).

[2] Wage & Hour Div., Notice of Proposed Rulemaking: Overtime, Dep’t of Labor, http://www.dol.gov/whd/overtime/nprm2015/ (last visited Mar. 6, 2016).(last visited Mar. 6, 2016).i

[3] Id.

[4] Id.

[5] Sam Ross-Brown & Amanda Teuscher, Why the DOL’s New Overtime Rule is Such a Big Deal, The American Prospect (Sept. 3, 2015), prospect.org/article/why-dols-new-overtime-rule-such-big-deal.

[6] Anne Fisher, New Rules Will Bring on a Pile of Overtime Lawsuits in 2016, Fortune (Jan. 6, 2016), fortune.com/2016/01/06/overtime-lawsuits-rules/.

[7] Id.

[8] Id.

[9] Wage & Hour Div., Fact Sheet: Proposed Rulemaking to Update the Regulations Defining and Delimiting the Exemptions for “White Collar” Employees, Dep’t of Labor, http://www.dol.gov/whd/overtime/nprm2015/factsheet.htm (last visited Mar. 6, 2016). The new standard would raise the salary threshold from $23,660 per year to $50,440 per year. Id.

[10] Id.

[11] Fisher, supra note 6

[12] Id.

[13] Id.

[14] Sam Ross-Brown & Amanda Teuscher, Why the DOL’s New Overtime Rule is Such a Big Deal, The Am. Prospect (Sept. 3, 2015), prospect.org/article/why-dols-new-overtime-rule-such-big-deal.

[15] Ross Eisenbrey & Lawrence Mishel, Raising the Overtime Threshold Would Directly Benefit 13.5 Million Workers, Econ. Policy Inst. (Aug. 3, 2015), http://www.epi.org/publication/breakdownovertimebeneficiaries/.

[16] Id.

[17] Id.

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