President Obama Addresses Outdated Overtime Exemptions

Barkan Meizlish , May 14, 2015

At his most recent State of the Union Address, President Obama announced the need to modernize overtime regulations as one of his top priorities for the year. President Obama’s memorandum to the Secretary of Labor, “Updating and Modernizing Overtime Regulations,” proposed revisions he wanted the Department of Labor to make to the existing overtime regulations. These anticipated changes could extend FLSA protection to millions of Americans.

Although not certain, the changes will likely focus on two main areas. First, the current salary requirement of $455 a week will likely increase. It has been in effect since 2004 and therefore has not been subject to inflation or today’s cost of living. Under the anticipated minimum salary requirement, employees with salaries of up to $45,000 a year could still be entitled to overtime pay. Second, the duties portion of the white collar exemptions, which exempt certain qualifying individuals from the overtime and minimum wage protections, will also likely be targeted. Secretary Perez described the current primary duty test as a “loophole” and explained that an individual that spends a very small percentage of time on management issues could still be considered exempt. A more black and white test with a percentage requirement for weekly time spent on exempt duties in order to fall under these exemptions is anticipated.

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