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Latest Executive Action Takes Aim at Overtime Pay for Salaried Workers

President Obama continues to harness his executive authority – particularly regarding the subject of growing income inequality for American workers. First, in mid-February, he issued an executive order raising the minimum wage for federal contractor workers from $7.25 an hour to $10.10. Next, on March 13, he issued a presidential memorandum instructing the Secretary of Labor to propose revisions to "modernize and streamline" the existing overtime regulations.

The primary objective with the memorandum is to bring the regulations up to date, potentially affecting millions of workers by expanding overtime eligibility to more salaried employees working 40+ hours a week.

Currently, under the Fair Labor Standards Act (FLSA), employers are required to pay overtime to certain salaried workers earning less than $455 a week, or $23,660 a year. Officials anticipate a revision to the salary threshold would raise the amount between $550 and $950 per week. (It’s been pointed out that the $455 level, set in 2004, would be worth $553 today, after adjusting for inflation.)

There's also the issue of designating employees as "executive, administrative and professional" for overtime exemption purposes – often called the "white-collar exemption." Additional proposals would address misclassification concerns, requiring businesses to provide overtime pay for a broader range of supervisory jobs, such as managers of fast-food restaurants and convenience stores.

While the intention is to put more money into workers' pockets and help stimulate the economy, critics argue that an overtime overhaul would stunt job growth and force businesses to cut staff to cover increased wages. In a sentiment shared by many businesses across the nation, House Speaker John Boehner said, "The president’s policies are making it difficult for employers to expand employment."

The president plans to solicit feedback from business leaders and workers around the country before issuing an executive order. Then, any proposals to overtime regulations will be open to public comment before final approval by the Department of Labor. Check back here for continued updates.

About Ashley Kaplan

Ashley Kaplan is an employment law attorney and HR consultant who oversees product development of compliance solutions for employers. While she devotes much of her time to tracking federal and state legal developments, she also enjoys traveling, playing soccer, and spending time outdoors with her family enjoying the Florida sunshine.