Obama’s Changes to Salaried Overtime Rules – How Does it Affect You?

Do you know what qualifications an employee must meet to be classified as salaried? They must make at least a certain wage per week and do professional work, right? Sounds pretty stringent but as it turns out the salary requirements are quite low and job classifications are very lax. Many employees end up doing low level work for very low wages and aren’t even eligible for overtime pay.

President Obama has in mind to change this. He is pushing to increase the salary limit for employees exempt from overtime as well as make other changes in the way they are classified.

Currently, an employee cannot be labeled salary exempt unless he/she meets the FLSA‘s set of requirements:

To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department’s regulations.

See other fact sheets in this series for more information on the exemptions for executive, administrative, professional, computer and outside sales employees.

The change would increase the salaried requirement above the $455 that the Bush administration set in 2004.

Jared Bernstein, the former chief economic adviser to Vice President Joseph R. Biden Jr., and Ross Eisenbrey, a vice president of the Economic Policy Institute suggested in a paper last year to raise the salary level to $984 per week. This isn’t too far off what some states are already doing. The California threshold is set to rise to $800 per week and the New York threshold to $675 in 2016.

In addition to raising the salary limit, Obama also wants to tighten the job classification rules around overtime exemption. Currently, an employee can be considered exempt if his position involves very little professional work. So, for instance, an employee can install roofs all day, along with his coworkers, but if he spends an hour supervising, he can be considered exempt from overtime. Obama wants to change this so that there must be a set percentage of professional or executive work in the employee’s job description.

Obama’s executive authority is ruffling some feathers in Washington. What do you think about it?

How This Change Affects Time Tracking

This change will make millions more Americans eligible for overtime pay. When the changes go into effect, employee statuses will need to be changed in your Timesheets.com time tracking account. Employees classified as Salaried do not accrue overtime. Only Hourly employees accrue overtime. Make sure to adjust any employees as needed for payroll!

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