Proposed Changes to the Fair Labor Standards Act Regarding Exemptions of Overtime Pay
As every employer knows (or should know) the Fair Labor Standards Act requires that covered employees be paid no less than the federal minimum wage and one-and-one-half times the employee’s wage for hours worked beyond 40 in any work week (the “overtime pay rate”). There are certain exemptions from the overtime pay rate requirement, one of which is for bona fide executive, administrative, professional and outside sales employees. For the exemption to apply, certain tests must be meet, one of which is a minimum weekly wage of no less than $455 ($27.63 per hour for certain types of work in the computer field). The Department of Labor has proposed new minimum weekly salary requirements for a worker to be considered exempt from overtime requirements under this exemption. The weekly wage would be raised for 2015 to $921, increase to $970 in 2016 and thereafter salary thresholds would be adjusted each year to be equal to the 40th percentile of weekly earnings for full-time salaried workers.
The weekly rate of pay is not the only test for meeting this exemption. The employee’s primary responsibilities must meet one or more of other tests including that the work:
- directly relates to the management of the employer’s business;
- be directly related to the operations of the employer or the employer’s customers;
- requires specialized academic training for entry into a professional field;
- be in the computer field;
- involve sales away from the employer’s place of business; or
- be in a recognized field of artistic or creative endeavor.
Application of these tests is not always clear, which creates questions as to whether a given employee is exempt from the overtime rules.
The proposed rules seek comment on whether to alter this “primary responsibilities” test to one that is more quantitative such as requiring that a certain percentage of the employee’s time be spent on one of the enumerated tests.
Employers who have used this exemption should consider commenting on the proposed rules directly or through a trade association or through their legal counsel. The Employment lawyers at Reger Rizzo & Darnell LLP stand ready to assist employers in commenting on and complying with the wage rules under the Fair Labor Standards Act. Contact us today should you have any questions, or require assistance in this regard.