President Obama instructed the U.S. Department of Labor (DOL) yesterday to change regulations to expand the Fair Labor Standards Act’s (FLSA) overtime provisions, in an effort to provide time-and-a-half wages to more employees. The President signed a memorandum instructing his Secretary of Labor Thomas Perez to “update” the DOL’s regulations regarding which employees are exempt from the FLSA’s coverage, and which employees are non-exempt, and thus must be paid time-and-a-half their regular wage rate for all hours worked beyond 40 hours in a week. The White House also issued a “fact-sheet” on the issue.
While it is not clear exactly what the DOL may do in response to the President’s direction, many feel that one likely step will be an attempt by the DOL to amend the FLSA’s regulations to raise the salary requirement employees must meet to qualify as an exempt executive, administrative or professional employee. The current salary requirement is at least $455 per week, an amount established with the last set of DOL changes to the FLSA’s regulations back in 2004. (Prior to 2004, the salary amount was $250, a number which had stayed constant since 1975.)
It is also possible that the DOL will try to adjust the definitions used to determine who qualifies as an exempt executive, administrative or professional employee. The DOL could set a specific percentage of an employee’s time that must be devoted to exempt duties, or it could fashion a different test for meeting the exemption, thereby further limiting the number and types of employees who would be exempt from overtime.
The President’s action yesterday follows his previous efforts to try to raise the minimum hourly wage to $10.10 for all non-exempt employees covered by the FLSA. Such a change requires Congressional action and cannot be done by the President alone. But, the President did raise the minimum wage for federal contracts to $10.10 via Executive Order, and he has stated that while Congress decides what to do, he will do what he can “on his own.” Some have suggested that the President’s instruction to the DOL yesterday is also an attempt to get Congress to act on a minimum wage hike.
At the moment employers can do little more than keep a close eye on the President’s and DOL’s actions and public statements about changing the FLSA’s regulations. Any proposed changes would have to be drafted and published by the DOL, and then a comment period would have to be provided. If that occurs, employers with concerns about any proposed changes should speak loud and clear and file comments with the DOL. In 2004, the regulations were changed, but only after the DOL received more than 75,000 comments and only after extensive hearings and numerous delays beyond when the DOL had hoped to put the changes into effect. If companies believe any proposed changes to the FLSA’s regulations are harmful to to their business, they will have an opportunity to let the DOL and their elected officials, know about their concerns. But for now, stay tuned for further details…