President Obama announced last week that the United States Department of Labor has proposed expanding the number of employees eligible for overtime pay by doubling the minimum salary threshold, to $50,440 a year or $970 a week. Employees making less than that amount, regardless of the duties they perform, would qualify for overtime pay for all hours worked in excess of forty hours in a work week. According to the US DOL’s fact sheet, the proposed change would expand the number of individuals eligible for overtime, covering 5 million more workers. The minimum salary requirement was set at $455 a week, back in 1975 and has never been adjusted for inflation. New York has taken a far different approach, periodically raising the minimum salary threshold which is currently set at $656.25, and set to be raised to $675 per week as of January 1, 2016. If the federal salary requirement is raised, New York employers will also be effected by this increase to minimum salary requirements.
Prior to Obama’s announcement there was talk that he was prepared to also alter the “duties” test under the white collar exemptions so that exempt supervisors and managers would have to spend more of their time performing managerial duties or duties which require the exercise of independent judgment or discretion. Obama has abandoned this position in favor of the higher salary requirements.
Obama’s plan remains open to public comment in the Federal Register until September 4, 2015 by clicking here: http://www.regulations.gov/#!submitComment;D=WHD-2015-0001-1153 This period will allow employers with the opportunity to express their opinions regarding the proposed changes. Until the public comment period expires and the proposed rulemaking becomes finalized no one can be certain of how this issue will evolve. Portnoy, Messinger, Pearl & Associates, Inc. will keep you advised on the latest developments throughout the coming months. Suffice it to say that if the minimum salary requirement is raised substantially, employers will need to reclassify certain positions that are currently exempt. Employers should be prepared to begin closely monitoring the work hours of these employees including the number of hours employees are permitted to work remotely. This article is intended for general information only and should not be construed as legal advice.