Overtime, under the Fair Labor Standards Act (FLSA), is one and one-half times the regular rate of pay for hours worked beyond the 40-hour workweek. Non-exempt employees, or those who are paid for their hours worked, receive not only the minimum wage, but also overtime. The Act, however, provides that employees who receive salary-based pay are considered as “exempt” from receiving overtime. To be deemed as exempted, employees must meet the requirements set forth by the FLSA based on job description and wage eligibility.
Take for instance those who perform managerial work. These so-called “white collar workers” are exempted from receiving overtime pay if they earn more than $455.00 per week, or about $23,660.00 every year. It was in 2004 when then-President George W. Bush set the $455-per-week threshold, which, at that time, was the first increase since the ‘70s. But President Barack Obama, who has already called for the increase in the federal minimum wage from $7.25 to $10.10 per hour, is making a change to it.
Recent reports revealed that he signed an executive order last March 13 proposing overtime rule changes that would hope to create better opportunities for salaried workers, especially those working in managerial positions, to receive extra pay.
The exact threshold amount is yet to be made known, but President Obama is instructing the U.S. Department of Labor on this. While the call for a federal wage increase that he proposed during his last State of the Union Address would require Congressional approval, this directive isn’t, although this might take a lot of time before this will become effective. It is projected that this move would affect those who are not compensated enough but are still exempted from receiving overtime, such as managers of fast food chains and convenience stores.
Meanwhile, a Los Angeles labor lawyer has mentioned that the proposed changes to the federal overtime rules have already been made in the State of California. Recently, the state set its threshold to $640.00 per week, and it is expected to increase once the increase in minimum wage kicks in this July. As the $8.00 rate in California rises to $9.00-per-hour, employees who earn salaries and are earning more than $720.00 would be exempted from overtime payments.