In March of 2014, President Obama issued a Presidential memorandum directing the Secretary of Labor to update the regulations regarding exemptions to the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements. The memorandum indicated that the so-called white collar exemption for executive, administrative, and professional employees has not kept up with the modern economy and, therefore, millions of Americans lack the protections of overtime and minimum wage.
Background on White-Collar Exemption
Employees who are paid hourly wages or who earn below a certain salary are generally protected by overtime regulations, while those above the threshold who perform executive, professional, or administrative duties are not. In 2004, the salary threshold for the white collar exemption was set at $455 per week, which is below today’s poverty line for a worker supporting a family of four.
Only 12 percent of current salaried workers fall below the threshold that would guarantee them overtime and minimum wage protections. The rest of salaried employees are ineligible for these protections because they fall within the white collar exemptions. States like New York and California have set higher salary thresholds because the current FLSA regulations are outdated
Possible Changes to the FLSA White-Collar Exemption
The Department of Labor may update the regulations to increase the current minimum salary threshold for the white collar exemption under FLSA. The Economic Policy Institute has recommended to the Department of Labor that the salary exemption threshold be raised to $970 per week, or $50,440 per year.
Currently, only white-collar employees who are paid on a salary basis qualify for the white-collar exemption. Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly or less frequent basis. It is possible that the updated regulations would modify the salary basis test to include a requirement that the salary received be large enough to ensure that it provides at least minimum wage for all hours in a workweek, accounting for the fact that they work more than 40 hours in a week.
Finally, the FLSA regulations may be updated to include changes to the primary duties portion of the white collar exemptions. Particularly, the executive exemption that applies to managers and supervisors may be changed to ensure that fifty percent of those employees’ responsibilities are actually exempt responsibilities.
Until then, the current white-collar exemptions are still applicable. If you or someone you know is not being paid minimum wage or overtime pay as required by FLSA because of misclassification as an exempt white-collar employee, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our top-rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing so it is important that you call our experienced attorneys today.