WASHINGTON, August 17, 2014 – By the end of 2015, a change in a federal overtime compensation law may occur. If it happens, millions of employees who are now shut out will find a much fatter pay-check as their extra hours will be paid at the overtime rate.
The Fair Labor Standards Act establishes minimum wage, overtime pay, and other standards for employees in the private sector and in Federal, State, and local governments. States must follow the law’s minimums, and they may establish higher standards.
One component part of overtime pay for some workers now rests with a dollar limit of weekly wages; specifically, when other conditions attach, if a worker earns more than $455 a week, that worker’s “protection” requiring overtime pay disappears.
For workers who are protected by the overtime provisions of the FLSA, their employers must pay them 1.5x their hourly wage for every hour they work over 40 hours per week in a one-week period. Employees who are not protected are not allowed to demand overtime compensation.
Millions of Americans cannot demand this 1.5 rate for hours worked above 40 per week because they are not protected by the FLSA: they are considered “exempt.”
To determine whether or not an employee is eligible for overtime pay, the employee’s job duties and responsibilities are considered. If the employee is in one of the defined categories encompassing several types of jobs, and the employee is paid more than $455 per week (which is $23,660 annually), he or she is not eligible for overtime payment.
The categories are:
1. Executive employee – primary duty is managing the business, or a department or subdivision of the business, and the employee must direct the work of at least two other full-time employees. The employee must have authority to hire and fire.
2. Administrative employee – performance of office or non-manual work is directly related to management or the general business operations, and this employee’s job includes using discretion and independent judgment related to matters significant to the business.
3. Learned Professional employee – work requires advanced knowledge, intellectual in character, and the job requires use of discretion and judgment, in a field of science or learning, where the learning was acquired by a prolonged course of instruction.
4. Creative Professional employee – a writer, producer, or director in a creative field and whose work requires invention, imagination, originality or talent.
5. Computer/Technical employee – a systems analyst, programmer, software engineer or other similarly skilled worker in the computer field.
If any of these workers’ jobs fall within these categories, and they earn just one dollar more than $455 a week, they do not qualify for overtime pay, regardless of the number of hours they work in a given week.
But wait Tonto! The law may change. In March, 2014, President Obama issued a memorandum to the Department of Labor directing it to update its regulations, in order to make more salaried employees eligible for overtime pay under federal law.
This will apply to the states, as again, they are required to match or provide more than federal law.
The change expected will be an increase in the minimum threshold from $455 a week. The last revision to this threshold, in 2004, when it was $250 a week, almost doubled that amount and brought it to its present $455.
Millions of employees will see more money in their weekly paychecks if these regulations take effect. By way of example, if the threshold increases to $700 a week ($36,400 annually), employers would have to pay overtime to all of their employees who make $700 a week or less. Now, employers only have to pay employees who make $455 a week or less. Increasing the threshold makes more employees eligible for overtime compensation (in my example, those newly included will be those who earn between $455 and $700 a week).
Wait again! There’s more (Ginzu knives?).
The DOL may also adopt a strict “division of labor” test. If less than half of the employee’s time is spent performing “executive, administrative or professional” duties, they get overtime. The employer would be required to prove otherwise to be allowed to avoid paying them the overtime wages.
In other words, if an employee is labeled an “executive” and he or she normally works 50 hours a week which includes 15 hours a week hiring, firing, promoting or evaluating the business’ employees, and 35 hours on customer service related work, the employer would not be able to claim that executive as “exempt” and would have to pay that employee the 10 hours of overtime worked at a 1.5x rate.
The President’s Memorandum “order” must go through a notice and comment process. Once the proposed regulations are prepared, the Department Of Labor will publish a notice. The public then has between 30 and 90 days to file comments. When the comment period ends, the DOL reviews and responds before publishing final regulations. In 2004, the process took 13 months to get to the final rule, as there were over 75,000 comments. Estimates here suggest that drafting the proposed regulations, reviewing the comments, and publishing the final regulations could take from 12 to 18 months to complete. Congress can act to prevent the DOL from moving forward by denying funding, so the upcoming mid-term elections could be important.
In the meantime, for aggrieved employees under existing federal law, an employer can be required to pay up to double the wages not paid. Some states exact more: Maryland can require an employer to pay triple the wages not paid.
A Maryland employee whose wages have been illegally withheld has three options:
- A state agency can get involved and attempt a resolution with the employer.
- The employee can file a lawsuit, where, if the court finds a violation of the Maryland Wage Payment law, it can award damages up to three times the amount of the unpaid wages plus attorney fees.
- The employee may file criminal charges against the employer, where, again, if the court finds an intentional failure, criminal penalties can be assessed.
Whistle while you work.
Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website.
His new book “Who Will Pay My Auto Accident Bills?, The Most Comprehensive Nationwide Auto Accident Resolution Book, Ever” can be reviewed on http://www.completeaccidentbook.com and can be ordered there, or obtained directly on Amazon: Click here to order
Mr. Samakow’s “Don’t Text and Drive” campaign, El Textarudo, has become nationally recognized. Please visit the website http://www.textarudo.com and “like” the concept on the Facebook page http://www.facebook.com/textarudo.Click here for reuse options!
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