Proposed Revisions to Overtime Rules Under FLSA

A few weeks ago, the Obama Administration published proposed rules that would change the rules for qualifying a salaried employee as exempt from overtime rules. The rules will soon be open for public comment, with the aim of issuing final regulations that would become effective early next year.

Under the proposed rules, the minimum weekly salary a salaried white-collar employee could earn while being exempt from overtime rules would rise from $455 per week to $970 per week — therefore, salaried white-collar employees earning under $970 a week would be eligible to earn overtime pay. The proposed rules also include mechanisms to automatically raise the minimum salary levels in step with inflation, to avoid the current situation where the salary levels become outdated.

Although the goal of the new regulations would be to lead to an increase in wages for overtime-exempt employees, employers will have to weigh the costs of bringing on additional workers to avoid paying overtime, which also include additional benefits requirements (such as those required under the Affordable Care Act). It remains to be seen what issues these proposed regulations will have for employers (which they are likely to bring up during the comment period) and how employers will adjust.

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