News

Proposed overtime rules could extend overtime to millions of workers

Q&A with Paul Ross

published in The Oklahoman | July 3, 2015

Earlier this week, the U.S. Department of Labor proposed significant changes to the Fair Labor Standards Act that would extend overtime protection to  an estimated five million workers who are currently classified as exempt. The proposed changes came more than a year after President Obama issued a presidential memorandum directing the secretary of labor to update the Act, particularly the section dealing with white collar exemptions for executive, administrative and professional workers. Labor and employment attorney Paul Ross was interviewed by The Oklahoman about the change, which the DOL says is designed to benefit certain employees who regularly work more than 40 hours a week, but earn at or near the poverty level for a family of four because of the current minimum salary for exempt status.

Ross explained that under the FLSA’s current “white collar” exemption, employees must make at least $455 per week on a salary basis (the equivalent of $23,660 annually) to be considered exempt and, therefore, ineligible for overtime.  Under the proposed rules, that minimum salary level for an exempt employee would increase to $970 per week (or the equivalent of $50,400 annually).

“If this rule goes into effect, many employees will need to be reclassified or have their salaries raised significantly,” said Ross. “Assuming huge raises aren’t an option for most employers, they will need to start tracking hours worked and paying overtime to the affected employees.”

Although the proposed changes, if approved, would likely not go into effect until 2016, Ross suggested that employers start reviewing their exemption classifications now. “The rules are complex and difficult to apply, and an adverse decision can have significant economic consequences,” he said.