The Department of Labor has finalized regulations to require overtime pay to approximately 4.2 million salaried workers. In order for a business to claim that an employee is eligible for the overtime exemption as an executive, administrative or professional worker under the Fair Labor Standards Act (“FLSA”) past November, the individual will need to make a salary of over $47,476 a year.
President Obama’s administration has been pushing for the rule this year because other measures to increase employee pay would need to be approved by Congress. The change in the overtime exemption could be promulgated by the executive branch alone through its regulatory capacity. The previous salary requirement, $23,600 or $455 per week, was established in 2004.
The final plan falls about $3,000 short of the original DOL proposal of $50,440 a year, which is 40 percent of the national median salary. After comments to the administration expressed concerns about regional differences, the adopted figure is instead 40 percent of the median salary in the South.
Automatic eligibility for overtime for salaried workers had fallen to a low of 7% from 62% in 1975. The new rules are expected to boost wages for workers by $12 billion over the next 10 years.
There may still be a few bumps in the road for implementation. Republicans are expected to attempt to block the rule from going into effect through legislation. The Labor Department has also said that it will exercise prosecutorial discretion in going after certain organizations that rely on public funding (such as Medicaid) to fund their activities and won’t have enough funds to immediately increase worker pay.
The Obama Administration posted this video on their website explaining the changes:
If an employer doesn’t comply with the law in December by paying time and a half overtime to salaried employees working more than 40 hours in a week and making below $47,476, the individual will be able to file a lawsuit under the FLSA seeking compensation for the time not worked. FLSA lawsuits have been booming over the past few years as more businesses have engaged in wage theft and more workers have sought to enforce their rights under the law.
If you are one of the workers experiencing wage theft, please contact our employment attorneys for a free initial consultation concerning your rights.