DOL Proposal to Overhaul Overtime

The U.S. Department of Labor (DOL) has proposed significant changes to federal overtime regulations that will increase the rights of workers. Under the proposed rules, the salary basis needed to qualify for white collar exemptions has more than doubled. This means that more employees will be entitled to overtime pay, including administrative, executive, and other “white collar” professionals.

The U.S. Department of Labor (DOL) has proposed significant changes to federal overtime regulations that will increase the rights of workers. Under the proposed rules, the salary basis needed to qualify for white collar exemptions has more than doubled. This means that more employees will be entitled to overtime pay, including administrative, executive, and other “white collar” professionals. For Minnesota workers, the new rules will give additional rights to compensation and the right to file wage and hour claims against violating employers.

More professional and executive workers will qualify for overtime
Currently, workers who earn over $23,660 a year, the equivalent of more than $455 per week, are exempt from overtime pay. The new rules proposed by the DOL are in response to a March 2014 order from President Obama who directed the agency to overhaul its regulations. Under the proposed rules, only workers who make more than $50,440 a year, or $970 per week, are exempted from overtime pay. These figures would be effective in 2016.

Automated salary updates and compensation
In addition to qualifying additional workers for overtime, the rules would automatically update salary and compensation levels annually to prevent these levels from becoming outdated. This means that the salary minimums will automatically adjust for inflation to prevent workers from being disqualified. The rules will set the standard salary in the 40th percentile of weekly earnings for full-time employees and would automatically update the salary and compensation minimums using fixed percentage of wages or the Consumer Price Index.

Proposed rules still under review
The proposed regulations are still under review, however, the adjustments are promising for the many white collar workers in Minnesota and nationwide. The rules will increase the total compensation requirement necessary to exempt any employee and establish a process to automatically update salary and compensation levels every year. The regulations are intended to provide an improved and effective test to determine eligibility for overtime and exemptions.

What does this mean for Minnesota workers?
Under the proposed regulations, it will become more difficult for employees to qualify for white-collar exemptions of overtime pay. This means that over 4.6 million workers in the U.S. who are currently categorized as “exempt” would no longer be exempt and would be entitled to overtime compensation. There will be a notice and comment period before the rules are put into effect, however the DOL is advising employers to review payrolls and to determine which workers will be affected in the event that the rules are adopted.

The overtime attorneys at Wanta Thome PLC are currently investigating and litigating employment cases involving wage and hour violations. For more information about your rights under Minnesota and federal overtime laws, please contact our lawyers at 612-252-3570.