Department of Labor Updates Overtime Rules

March 13, 2014, President Obama authorized the Department of Labor to “propose revisions to modernize and streamline the existing overtime regulations.”

The memorandum asks the DOL to: (1) consider how the regulations could be revised to update existing protections; (2) address the changing nature of the workplace; and (3) simplify the regulations to make them easier to understand and apply.

The threshold for exemption from overtime was originally meant for high-paid, white-collar employees, but now covers workers earning as little as $23,660 a year. The $455 per week threshold is below today’s poverty line for a worker supporting a family of four, and well below 1975 levels (i.e., the year the initial threshold was set up) in inflation-adjusted terms.

Twelve percent of salaried workers fall below the $455 weekly threshold (compared with 18% in 2004 and 65% in 1975). Many of the remaining 88% of salaried workers are ineligible for minimum wage and overtime protections because they fall within the white-collar exemptions.

Many employers and workers have difficulty understanding the existing regulations, and many recognize the rules should be modernized to better fit today’s economy.