Report: White House to Make More Employees Eligible for Overtime

Author: Michael Cardman, XpertHR Legal Editor

March 12, 2014

President Obama will ask the US Department of Labor (DOL) to issue new Fair Labor Standards Act (FLSA) regulations that will make it more difficult for employers to avoid paying employees overtime, according to numerous media reports.

The DOL will raise the minimum salary that an employee must earn to qualify for the FLSA's "white-collar" exemptions for executives, administrators and professionals, according to an article published in the New York Times. The White House did not respond to a request for confirmation.

Currently, FLSA-exempt employees generally must be paid at least $455 per week (or $23,660 per year) on a salary basis. The article said Obama would ask the DOL to "significantly increase" the minimum salary, but it did not specify the new level.

A paper presented last year at a DOL symposium celebrating the FLSA's 75th anniversary urged the agency to raise the salary basis to $970 per week (or $50,440 per year). Millions more workers would become eligible for overtime under the FLSA at this level, according to the paper's author, Ross Eisenbrey of the Economic Policy Institute.

According to the New York Times article, President Obama also "will try to change rules that allow employers to define which workers are exempt from receiving overtime based on the kind of work they perform."

This appears to be a reference to the FLSA's primary duty standard, which allows an employee to qualify for an overtime exemption even if he or she does not spend a majority of his or her time performing exempt work. In one prominent example that was alluded to by proponents of the new regulations, a federal appeals court found a retail store manager was exempt even though he spent 99 percent of his time performing "mundane physical activities necessary for [his store's] successful operation." Grace v. Family Dollar Stores, Inc. (In re Family Dollar FLSA Litig.), 637 F.3d 508 (4th Cir. 2011).

The new regulations might require that employees perform "a minimum percentage" of white-collar work to qualify for an exemption, according to the article.