Currently, employers must pay workers who are classified as exempt from the Fair Labor Standards Act’s (also known as FLSA-exempt) overtime requirements a salary of at least $455 per week, or about $23,000 per year. If an employee makes less than that amount, the employer would be required to pay them overtime (at a rate of 150% of their hourly rate) for hours worked in excess of 40 per week. The kinds of workers who generally fall into this low-salary exempt-from-overtime category are assistant managers in the retail and hospitality industries and low-level administrative employees in service and manufacturing businesses. Often, such positions demand hours well in excess of 40 hours per week.
However, at the direction of President Obama, the U.S. Department of Labor is currently examining the overtime and minimum wage exemption regulations to determine whether the minimum salary for exempt workers should be increased. Some economists have proposed a minimum $50,000 annual salary for these kinds of workers. A group of Democratic U.S. Senators have advocated for a minimum $56,000 annual salary for overtime-exempt employees.
Either way, new regulations including significant increases in the minimum exempt salary requirement would represent a sea change from the status quo, with many currently exempt, salaried employees becoming eligible for overtime pay. Businesses would then have to decide whether to increase these employees’ salary in order to continue to require them to work more than 40 hours a week without extra pay, or to cap the number of hours they work to escape from having to pay them large sums in overtime wages.
The Department of Labor is expected to announce any changes to the exemption regulations later this year.