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Proposal to Strengthen Overtime Protection
Summary of
Proposed Changes
Minimum Salary Level Increased: Under current rules, an employee
earning only $155 a week can qualify as a “white collar” employee not
entitled to overtime pay. The Department’s proposal would raise this
minimum salary to $425 a week—an increase of $270 a week and the largest
increase since the Fair Labor Standards Act was passed by Congress in 1938. The
proposed changes would guarantee overtime to:
- An employee working 50 hours per week managing a restaurant for
$15,600 per year.
- A worker putting in 60 hours a week managing a department store for
$18,000 per year.
- An employee working 42 hours a week supervising a machine shop for
$17,000 per year.
Duties Tests Rely on “Primary Duty”: The proposed rule
retains the current “short test” reliance on an employee’s
primary duty. The proposal would eliminate the long-inactive “long
test” rule restricting exempt employees from devoting more than 20% of
time in a workweek performing non-exempt duties.
- Executive Duties: The proposed executive duties test has three
requirements: managing the enterprise; directing the work of two or more
employees; and having authority to hire or fire (or such recommendations are
given particular weight).
- Administrative Duties: The proposal would replace the
“discretion and independent judgment” test, which has been the
subject of confusion and litigation, with a new test that employees must hold a
“position of responsibility.”
- Professional Duties: The proposal recognizes as exempt
“learned professionals” certain employees who gain equivalent
knowledge and skills through a combination of job experience, military
training, attending a technical school or attending community college.
Employees Treated More Equitably: The Department proposes to
allow deductions from the salary of exempt employees for full-day absences
taken for disciplinary reasons, such as sexual harassment or workplace
violence. Currently, only hourly workers’ wages are subject to such
deductions. The proposal retains the “salary basis” rule prohibiting
deductions from exempt salary for partial-day absences.
Impact of Proposed Changes
1.3 Million Additional Low-Wage Workers Gain Overtime
Protections: Increasing the minimum salary level will automatically
guarantee overtime to 1.3 million additional low-wage workers.
Overtime Protections Strengthened for Additional 10.7 Million Hourly
Workers: Updating the duties tests will make entitlement to overtime more
certain for 10.7 million workers.
Enhance Economic Growth: Reducing regulatory red tape and
litigation costs will free up resources and stimulate economic growth.
Rules Easier to Apply and Enforce: Bringing the rules into the
21st century and clarifying the outdated regulatory language will
help employees understand their rights and ensure they receive their
hard-earned pay. Employers will be better able to understand their obligations
and comply with the law. The Labor Department will be equipped to more
vigorously enforce the law.
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