The Fair Labor Standards Act requires that most employees be paid 1 ½ times their regular rate of pay when they work over 40 hours in a work week. There are a number of exceptions to this, including the so called “White Collar Exemptions.” The White Collar Exemptions say that certain employees may be paid a set salary instead of 1 ½ times their regular rate of pay for overtime. Those regulations are complex and the subject of significant litigation.
One of the requirements for the White Collar Exemptions is that the employees must be paid at least $455 per week. This is a very modest threshold. It is less than $24,000 per year. It seems unfair that a convenience store manager could be paid $24,000 a year for 60-80 hours of work. However, this is often the case. The United States Department of Labor is taking a new look at this threshold.
The Fair Labor Standards Act gives the Department of Labor “rule making” authority to set standards in implementing the overtime provisions of the Fair Labor Standards Act. In other words, the Department of Labor can raise the minimum salary that exempt employees receive without having to go to Congress. The DOL is beginning this process. This is part of President Obama’s initiative to close the income inequality gap in the United States. The Obama administration believes that raising the minimum salary for exempt employees would put more money in consumers’ hands and help grow the economy.
It is also just the right thing to do. The idea that an employer could legally work an employee 60-80 hours per week and pay them less than $24,000 per year is morally troubling.
The following is a link to a March 13, 2014 Wall Street Journal article about these important changes: