OMG!!

I knew this was coming down the pike. It isn’t enough that the exemption tests remain (even after the 2004 amendments to the FLSA regulations) an oftentimes gray morass that leaves employers and their counsel constantly guessing about who is and is not exempt. Now, Senate Democrats have introduced a bill to amend the FLSA to make even more salaried workers overtime eligible.

Right now, 12% of salaried employees are overtime eligible, that is, they do not fall into one of the three “white collar exemptions.” Under the new tests, this number would geometrically rise to 47%, under the proposed Restoring Overtime Pay for Working Americans Act. Senator Harkin, who is leading the push for the bill, stated that “every worker deserves a fair day’s pay for a hard day’s work, but because our overtime laws are out-of-date, Americans around the country who work long hours away from their families are denied a paycheck that reflects that work. That hurts their families and our economy.”

As currently constituted, in order to meet the exemptions, an individual must receive a salary of $455 per week, up from the admittedly low $250 per week that existed prior to the 2004 revisions. Under the proposal, this salary threshold would rise (over some years) to $1,090 per week and then be tied to inflation. “Highly compensated” employees, who now must earn at least $100,000 annually to be exempt, would need to earn at least $125,000 per year.

The legislation would also focus on the (already thorny) issue of “primary duty,” which means the percentage of time that workers spend performing exempt work. Now, a worker (under ordinary circumstances) must spend 51% of their time doing such work and can still be considered exempt if the percentage falls below 51% of the facts show that they retain management as their main job duty. Under this legislation, the person would have to spend the “majority” of their time performing exempt work (such as is currently the law in California).

This, to me, is an unwarranted “attack” on the relatively new regulations only in existence for about a decade. If passed, the law will make it more difficult for businesses to operate and may likely impel employers to keep more workers as straight hourly, rather than risk a misclassification challenge. In certain industries, like the retail and restaurant industries, this may create havoc. If anything, the regulations, especially the administrative regulation, should be revised to make them more understandable and easier to apply in practice.