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Human Resources

President Obama Proposes Changes to FLSA

David Peasall, VP, Human Resources
by David Peasall, VP, Human Resources on March 25, 2014

FLSAPresident Obama wants his administration to change the rules regarding who is eligible for overtime pay under Fair Labor Standards Act (FLSA). He recently directed the Department of Labor to do its first update of FLSA regulations in 10 years.

Currently, executive, administrative and professional employees are exempt from the FLSA’s overtime pay requirements if they meet certain duties parameters and earn more than $455 per week. That salary threshold has only been raised twice in the last 40 years. The initiative is also expected to focus on changing the qualifications for those workers to be classified as bona fide executive, administrative, professional employees.

The process could take months – but it’s aimed at making overtime pay available to certain employees who may work many hours per week but don’t qualify for overtime pay.

In the president’s memorandum, the White House said: “Millions of salaried workers have been left without the protections of overtime or sometimes even the minimum wage. For example, a convenience store manager or a fast food shift supervisor or an office worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receive a dime of overtime pay.”

Currently, The Fair Labor Standards Act requires employers to pay most employees overtime pay at time and one-half their regular pay rate for the hours they work in excess of 40 in a workweek. However, Section 13(a)(1) of the FLSA provides an exemption from overtime pay for employees employed as executive, administrative, professional and outside sales employees.

To qualify for that exemption, employees must be paid at least $455 per week on a salary basis and their job duties must meet specific tests. In general, their duties must include managing a part of the enterprise and supervising other employees or exercising independent judgment on significant matters or require advanced knowledge. Job titles do not determine whether employees are exempt from the overtime requirement.

Again, no laws have officially been changed, and it will take several months for the Department of Labor to take a look at the ideas being proposed. FrankCrum will be watching this piece of HR/employment news and we will keep you updated when any progress is made.

For more information, you can read the president's official memorandum as published by the White House here.

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David Peasall, VP, Human Resources
David Peasall, VP, Human Resources

David Peasall joined FrankCrum in 2010. Since that time, he has served as the Vice President of Human Resources. Serving in the Army, he began his 20+ year career in human resources and benefits administration and has held several management positions within the corporate and public human resources environments overseeing employee benefits sales and administration, recruitment, compensation, employee relations, organizational development, and compliance. He has the nationally recognized designation of Senior Professional in Human Resources (SPHR), PPACA certification from NAHU, and a Bachelor’s degree from Barry University with a dual major in Human Resources Management and Health Services Administration. He has written for the Society for Human Resources Management, HR Insight, Proyecto Magazine, and for online publications in the restaurant and health care industries. While not at work, this Florida native loves spending time with his family, preferably boating, fishing, and diving the beautiful waters of Florida.