In a recent speech, Labor Sec. Tom Perez elaborated on how the Obama administration seeks to revise the overtime pay regulations, according to Reuters. The Department of Labor issues interpretive regulations on the Fair Labor Standards Act (“FLSA”). The Courts weight these regulations heavily when interpreting the FLSA.
According to Perez’s speech, the administration seeks to change the regulation’s definition of who is nonexempt. The FLSA provides that “nonexempt” employees receive pay at one and a half times their regular rate of pay for working over 40 hours per week.
One change will be to the “primary duty” rule. Under the primary duty rule, if an employee’s primary duty is exempt, meaning their assignment is primarily managerial, administrative or professional, then that worker will be exempt despite spending most of their time doing nonexempt work. Thus, for example, an employee charge was supervising can spend nearly all their time stocking shelves, but since they also have supervisory duties, then they will not receive any overtime pay. Perez’s speech implies that the proposed rules will also consider the amount of time spent in nonexempt work.
Another area of the proposed changes is the salary amounts. Presently, employees are eligible to be exempt if they earn a salary of $455 per week. Clearly, the proposals will seek to raise that amount.
These proposed changes could be a political hotbutton. Business does not want to pay out more money and does want interference with doing business. They have also paid a lot in overtime pay cases (check out my cases.) Labor sees soaring executive pay and rising cost of living as supporting their position.
For an explanation of California overtime laws, check out our page on the the overtime exemptions.