Since 2004, the salary threshold for so-called white-collar exemptions has been $23,660.
Republicans and Democrats agree – it’s time for that threshold to be raised.
The question is, how much?
Under the Fair Labor Standards Act, nonexempt workers must be paid one and one-half times their regular rate of pay for time worked over 40 hours a week.
To be exempt from overtime, workers must be paid a minimum amount (currently under $23,660) and meet certain work duty tests.
In March, the Department of Labor signaled plans to raise the salary threshold to $35,308. This would bring the threshold to a midway point between the current level and the $47,476 level approved by the Obama administration in 2016.
According to some legal experts and a federal Judge in Texas, the Obama administration threshold would have had the effect of making the work duty tests irrelevant. In the court’s view – the minimum salary level is meant simply to serve as a screen to eliminate clearly nonexempt employees.
As a reminder, the parameters of work duty tests follows:
- Executive Exemption. The employee’s primary duty must be managing the enterprise or a department or subdivision of the enterprise. The employee must customarily and regularly direct the work of at least two employees and have the authority to hire or fire workers (or the employee’s suggestions and recommendations as to hiring, firing or changing the status of other employees must be given particular weight).
- Administrative Exemption. The employee’s primary duty must be performing office or nonmanual work that is directly related to the management or general business operations of the employer or the employer’s customers. The employee’s primary duty also must include the exercise of discretion and independent judgment concerning matters of significance.
- Professional Exemption. The employee’s primary duty must be to perform work requiring advanced knowledge in a field of science or learning that is customarily acquired by prolonged, specialized, intellectual instruction and study.
In 2004, the Department of Labor set the salary threshold based on the 20th percentile of earnings for salaried workers in the lowest-wage region in the country or in the retail sector nationwide. That formula is the same one used by the Trump Administration in their latest recommendation.
The Society for Human Resource Management and a number of Republicans agree with the Trump Administration’s use of the 2004 formula.
However, a significant number of Democrats disagree – siding with Rep. Mark Takano, D-Calif., who opposes the $35,000 threshold as too low and calling the proposal “woefully inadequate.” According to Takano, the DOL’s “new overtime salary threshold ignores the economic realities middle-class workers are facing across the country.”
Takano and other Democrats recently reintroduced the Restoring Overtime Pay Act to codify the Obama administration’s 2016 overtime rule.
How will it all turn out? Stay tuned!
If you’re an employer and have questions about labor and employment law, including overtime requirements, consider calling on the attorneys at Kainen, Escalera & McHale in Connecticut. We do one thing and one thing only – we are an employer defense law firm – in fact, we are one of the largest employer defense law firms in the region. What’s more, each of our attorneys has over 20 years of experience in employment law and labor law matters and can provide your business with comprehensive legal counsel ranging from assistance with necessary preventive measures to trial advocacy. Please contact us if we can help you.
The information provided above is made available by Kainen, Escalera & McHale, P.C. for educational purposes only. It is not intended to provide specific legal advice to your individual circumstances or legal questions. You acknowledge that neither your reading of, nor posting on, this site establishes an attorney-client relationship between you and our law firm or any of the attorneys in our firm. This information should not be used as a substitute for seeking competent legal advice from a licensed professional attorney in your state nor is it provided for the specific purpose of soliciting your business on any particular matter. Readers of this information should not act upon anything communicated in it without seeking professional counsel.