Focus on Exemptions for Administrative and Professional Employees
President Obama recently directed U.S. Secretary of Labor Thomas E. Perez to “modernize and streamline” the Department of Labor's (DOL) “white collar” overtime exemption regulations at 29 C.F.R. Part 541. The first two paragraphs of the memorandum clearly state the President's focus of regulatory changes.
“The Fair Labor Standards Act (the “Act”), 29 U.S.C. 201 et seq., provides basic rights and wage protections for American workers, including Federal minimum wage and overtime requirements. Most workers covered under the Act must receive overtime pay of at least 1.5 times their regular pay rate for hours worked in excess of 40 hours per week.
However, 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. Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage.”
The move to revise overtime exemption regulations is in line with President Obama's message of “giving America a raise” and follows the President's February Executive Order raising the hourly minimum wage for federal contractors to $10.10 an hour. While it is unknown what what the final changes to the current regulations will be, the focus of the White House appears to be on three areas: (1) raising the minimum salary level, (2) revising the duties requirement for the executive exemption, including eliminating the concept of concurrent duties, and (3) refining the definition of a computer professional.
New Rules Will Take Time to Develop and Enact
Any regulatory changes proposed by the Department of Labor (DOL) will be subject to a lengthy notice and comment process and it is inevitable that legal challenges will follow, as they did in 2004. If the 2004 overhaul of the white collar exemptions is any indication, this is likely to be a long and contentious process. All revisions to the Part 541 regulations must go through notice and comment rule making. Once proposed regulations are prepared, the DOL will publish a notice of proposed rulemaking, giving the public between 30 and 90 days to file comments. After the close of the comment period, the DOL reviews and responds to comments before publishing final regulations.
Regardless of the length of time it takes to enact new regulations, the changes have the potential to dramatically expand the number of employees eligible for overtime. Employees in many industries are expected to be impacted significantly by the proposed changes, including those working in retail, restaurant, hospitality, healthcare, information technology and financial services.
The full Presidential Memorandum for the Secretary of Labor can be found here.
If you have questions about current or proposed overtime regulations don't hesitate to contact the experienced California employment lawyers at Kingsley & Kingsley. Feel free to call us toll-free at (888) 500-8469 or click here to contact us via email. We are located in Encino, CA (Los Angeles).