The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., guarantees overtime pay for employees of covered employers for work performed in excess of 40 hours in a week, provided that they do not fall under one of the law’s exemptions. Regulations promulgated by the U.S. Department of Labor (DOL) set a minimum salary level, above which some employees are exempt from the overtime rule. The DOL issued a new regulation in May 2016 raising this level, giving more than four million workers nationwide access to overtime pay. 81 Fed. Reg. 32391 (May 23, 2016). The new rule will go into effect on December 1, 2016.
Workers are entitled to one and a half times their regular pay under the FLSA if they work over 40 hours in a week. 29 U.S.C. § 207(a). Employees who work “in a bona fide executive, administrative, or professional capacity,” however, are exempt from the FLSA’s overtime rules. Id. at § 213(a)(1). This applies to a wide range of workers, and the DOL’s regulations go into great detail about how the overtime exemption applies to executive, administrative, professional, computer, and outside sales employees. See 29 C.F.R. § 541.0 et seq.
Current DOL regulations only exempt executive, administrative, and professional employees from the overtime rules if their salary is at least $455 per week, also calculated as $910 biweekly, $985.83 semimonthly, or $1,971.66 per month. 29 C.F.R. § 541.600. Annually, this equals a salary of just under $23,660. The DOL set these levels in 2004, and that was reportedly its first revision of the salary levels since 1975. 69 Fed. Reg. 22122 (Apr. 23, 2004). The new rule is partly a response to concerns that the cost of living has exceeded the 2004 level.
The DOL states that it received about 270,000 comments in response to its Notice of Proposed Rulemaking last year, a remarkably high number that suggests how important the rule is. When the new rule takes effect in December, executive, administrative, and professional employees will only be exempt from the overtime rule if their salary is at least $913 per week, or an annual salary of $47,476. The Secretary of Labor is instructed to update this amount every three years, starting in 2020, based on certain statistics from the Bureau of Labor Statistics.
According to the DOL, more than 4.2 million workers will no longer be exempt from the overtime rules as of December 1, 2016. These include nearly 132,000 workers in New Jersey and almost 280,000 in New York. Hopefully, this will translate into better earnings for workers all over the country, since employers will be required to pay more employees for their overtime. The DOL itself notes a possible negative impact, although it tries to spin it as a positive. In addition to “put[ting] more money into the pockets of many middle class workers,” the DOL states that the rule could also “give them more free time,” by which it means that employers could “limit their work to 40 hours in a week.”
If you need to speak to an attorney about a wage law matter in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at (646) 867-7997 to schedule a confidential consultation.
More Blog Posts:
Lawsuit Against New Jersey Convenience Store Franchisee Claims Minimum Wage, Overtime Violations, The New Jersey Employment Law Firm Blog, May 9, 2016
New Jersey Judge Approves Settlement in FLSA Class Action for Unpaid Overtime, The New Jersey Employment Law Firm Blog, January 15, 2016
New York Pizza Franchises Incur Judgments, Fines for Minimum Wage and Overtime Violations, The New Jersey Employment Law Firm Blog, May 15, 2015