President Obama announces overtime expansion proposal

“We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years — and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year — no matter how many hours they work.”

With those words, President Obama on June 30, introduced his plan to expand the eligibility for overtime compensation to an estimated 4.68 million white-collar workers. Workers who earn less than $970 per week, or $50,440 per year, would have to be paid overtime even if they are classified as a manager or professional, according to details announced by the U.S. Department of Labor (DOL). That is an increase of more than double the current salary threshold of $455 per week or $23,660 per year, which has been in place since 2004.  In addition, the DOL intends to increase that minimum threshold amount annually in order to keep pace with inflation.

These changes are expected to cost retailers and restaurants millions of dollars as they “hollow out” low- and mid-level management positions, according to the National Retail Federation, by forcing employers to increase salaries so that managerial employees can keep their exempt status.  In addition, employee morale is expected to take a hit as some employees may feel they are being demoted as they are reclassified from exempt to non-exempt.

In the States in which our firm practices, this will affect an estimated 70,000 employees in Alabama, 370,000 in Florida, 40,000 in Mississippi and 120,000 in Tennessee.  That is a total of 600,000 employees in our four States alone.

Linked for your reference are the official DOL 2015 Overtime Changes Fact Sheet and Frequently Asked Questionspublications.  Please do not hesitate to contact Carr Allison’s Labor and Employment Lawyers for more information and to discuss your options for opposing this new legislation.


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