In a prior blog, we questioned whether the proposed changes to the Fair Labor Standards Act (FLSA) would see the light of day, given the political environment. These changes would set new standards for exempt status for certain “white collar” workers, protect the rights of home care workers, and simplify the language used to explain these rules. Now, all doubts are set to rest because the Department of Labor (DOL) has hosted the proposed new law on its web site. The DOL estimates that the proposed rule could impact the minimum wage and overtime protections of about 4.6 million workers who are currently exempt from overtime when the final ruling possibly becomes effective next year.
The FLSA requires employers to pay minimum wage and overtime pay (one and one-half times the employee’s regular rate for hours worked over 40 in a workweek) to employees. But, under extant guidance, the FLSA also put in place a number of exemptions from the minimum wage and overtime pay requirements. Workers in certain executive, administrative/professional or computer roles paid at least $455/week ($23,600/year) on a salary basis were considered exempt, ineligible for overtime pay. The proposed changes recognize that many of these workers who earn salaries on the lower end of the minimum salary threshold are often “low level” managers or clerical employees who work alongside hourly employees, often work long hours, and only have marginally more responsibility than their overtime-eligible coworkers.
Here is a quick peak at what the proposed rule expects of employers:
The proposed limits on exempt salary levels would henceforth not be frozen at a particular level; they would automatically increase every year either by maintaining the levels at a fixed percentile of earnings or be linked to inflation through the changes in the Consumer Price Index for All Urban Consumers.
However, the DOL remains undecided on the primary duties test. The DOL has instituted a 60-day period for public comments, and will consider them before instituting any revisions to the duties test or revamping it entirely. In any case, the new law is bound to create more opportunities for contingent workers, because employers will soon realize the efficacy of using their services to address shortfalls in manpower instead of increasing labor costs through additional overtime pay.
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