What Obama Administration’s Expansion of Overtime Means for You

July 1, 2015

The Fair Labor Standards Act (“FLSA”) was passed in 1938 in an effort to address concerns about the exploitation of blue-collar workers made to work more than the standard 40 hours a week without extra pay. Almost a century later, the White House just announced its plan to propose new rules that will drastically increase the number of people eligible to receive overtime pay. This plan focuses on bringing relief to America’s middle class and memorializes the Administration’s observation that: “[a] hard day’s work deserves a fair day’s pay.”

While the FLSA draws a bright-line distinction between blue collar and white collar work, this distinction is far less clear today. Under the current law, those who receive a higher salary and whose work is managerial in nature are exempt from overtime pay. What this means is that if you make more than $23,660 a year, you are exempt and ineligible for overtime pay. The Administration’s new proposal would more than double that threshold extending it to $50,440 a year. This increased salary cut-off would most directly affect businesses such as retail stores and restaurants.

This proposal is not without its critics. Business lobbyists, including the National Retail Federation, argue that this will have a negative effect on businesses and employees alike. These groups cite not only to the high costs but also the fact that it may reduce employees’ flexibility in performing their job functions.

These changes are scheduled to take effect in 2016 and extend overtime pay to about 5 million workers. If successful, this will be one of the largest actions by an administration to bolster middle and lower class incomes.

For over 40 years, Parks, Chesin & Walbert has specialized in overtime matters. To see if you could be eligible for overtime under this new proposal please contact our firm for a free evaluation at 404-873-8048 or firm@pcwlawfirm.com.