More Overtime Expansion
On Saturday, March 15, 2014, President Obama continued his push to help middle income workers by making more employees eligible for overtime pay under the Fair Labor Standards Act (“FLSA”). The FLSA is the federal law that requires employers to pay time and a-half to wage for work employees. On March 13, 2014, the President issued a memorandum to the Labor Department proposing significant changes to overtime rules. President Obama used his weekly radio address to focus attention on his labor agenda.
Changes to White Collar Overtime Exemption
White collar employees, such as professional, executive and administrative employees, are considered exempt from the overtime laws if they earn at least $455 in gross pay per week. This equates to an hourly wage of $11.37 based on a 40 hour work week. Extra hours, though, reduce the wage rate. At about 60 hours per week, the white collar employee barely earns the federal minimum wage. In states like Ohio with a higher minimum wage, they earn less than the minimum wage.
The $455 per week limit comes out to $23,660, which is below the poverty level for a four-person family. President Obama has not called for a specific increase. Many economists, however, have proposed doubling the weekly pay limit to nearly $1,000 per week, or $52,000 annually. That figure better reflects a white collar pay level.
Many employers designate employees as supervisors to avoid overtime pay requirements. President Obama’s memorandum to the Labor Department also proposes revised Department rules to re-define the term supervisor.
The process of implementing rule changes includes a period for comment from the public. This process means that it could be 12-18 months before new rules go into effect. The last increase to the white collar pay limit occurred under President Bush in 2004.