Overtime overhaul may cost employers billions

 

Millions more employees may be entitled to overtime pay under new rules

Millions more employees may be entitled to overtime pay under new rules

On March 13, President Obama issued a memo to the Secretary of Labor calling for sweeping changes to the regulations that govern overtime pay.   According to the President, the “regulations regarding exemptions from the Act’s overtime requirement, particularly for executive, administrative, and professional employees (often referred to as ‘white collar’ exemptions) have not kept up with our modern economy.”   The President’s use of his executive power to push new rules without congressional approval has been controversial, and it is not yet clear what form the new rules will take.

Currently, employers cannot deny at least time-and-a-half overtime pay for non-executive employees who work more than 40 hours a week and make less than $455 per week, or roughly $24,000 per year.  One thing the new rules are likely to do is raise that minimum threshold.  If it is raised, millions more employees could be owed overtime pay.

The president will likely also try to change the rules allowing employers to define whether their workers are “executives,” and therefore exempt from receiving overtime pay.  Currently, if an employer classifies an employee’s job as executive in nature, such as overseeing a work crew or making hiring and firing decisions, then the employer may exempt that employee from overtime.  The new rules will likely redefine which employees can be considered “executives,” and may drastically expand employers’ liability for overtime pay.

If the Department of Labor passes the rules the president hopes for, many employees will see an increase in or become eligible for overtime pay.  On the other side of the coin, many employers will see increased costs as they are required to pay more overtime or hire additional help.  The new rules have yet to be written, and the attorneys at Tucker Law Group will follow them with interest and report any developments here.

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