Obama Proposes Sweeping Changes to FLSA Exemptions

13 March 2014 Labor & Employment Law Perspectives Blog
Authors: Carrie Hoffman

A few weeks ago, President Obama issued an Executive Order raising the minimum wage for workers on new federal contractors from $7.25 an hour to $10.10 an hour. That measure was designed to build momentum for a minimum wage increase for the private sector as well.

Now, President Obama has announced he will direct the Department of Labor to revise the so-called “white-collar” exemptions on executive and professional employees so that many currently exempt employees will not be considered exempt and will therefore be entitled to overtime compensation. These regulations were last revised in 2004 under then President George W. Bush. This directive is expected to be issued on March 13, 2014.

Experts believe that the proposal would both increase the minimum amount paid to salaried, exempt employees and alter the exemptions to be narrower and therefore fewer currently exempt employees would meet the new test(s). The current minimum weekly salary for salaried, exempt employees is $455 per week and was established in 2004. The President is not expected to set a new minimum weekly salary on March 13 but will leave that up to the Department of Labor. Additionally, experts expect that the President will direct the Department of Labor to more narrowly define who meets the executive exemption to those who spend more than 50% of their time in supervisory tasks. Currently, there is not a bright line rule on how much time must be spent supervising to meet the exemption.

Look out for a follow-up blog post as this story unfolds!

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