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"Overtime" over time: the past, present and future of overtime laws

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Background

The Fair Labor Standards Act (FLSA) evaluates employee overtime eligibility based on two definitions: “exempt” and “non-exempt.” Exempt employees are employees who do not qualify for overtime and non-exempt employees are those who do qualify for overtime. For white collar employees, this “exempt” or “non-exempt” status is determined by each employee’s salary or hourly wage equivalent.

So what’s the threshold used to differentiate between exempt and non-exempt employees? 


Current overtime laws

Currently, the white collar overtime threshold is the same as it’s been since 2004. In order to qualify as overtime non-exempt, an employee must earn less than $23,660 per year. Employees who earn more than this amount are exempt from overtime—meaning their employer is not required to provide overtime pay.

 

Notable changes in overtime laws

The current white collar exemption threshold has not changed since 2004, however many have discussed increasing it in recent years. The most notable attempt to change this threshold occurred in 2016 when the Obama administration proposed increasing the threshold to $47,476—over two times the existing threshold. This attempt was overruled by a federal district judge.

 

The future of overtime laws

Most parties agree that the threshold needs to be increased, but not quite so dramatically. For instance, the Society for Human Resources Management (SHRM) proposes increasing the overtime cut off to $31,824.

How exactly did this SHRM come to this number? SHRM pinpointed the 20th percentile of salaried employees in the lowest wage region of the United States. For this particular assessment, SHRM identified the South as the lowest wage region and used the region’s 20th percentile to set the threshold at $31,824. At that time, it set the level at the 20th percentile of salaried employees in the lowest wage region (the South), resulting in the $23,660 minimum salary level.

As of September 6th, 2018, the Department of Labor (DOL) has opened up a forum for discussion of the 2019 overtime threshold. There will be a total of 5 of these sessions each of which is listed below:

  • Sept. 7: 10 a.m. to noon, Atlanta 
  • Sept. 11: 10 a.m. to noon, Seattle
  • Sept. 13: 10 a.m. to noon, Kansas City, Mo.
  • Sept. 14: 10 a.m. to noon, Denver
  • Sept. 24: 10 a.m. to noon, Providence, R.I.

Registration is required for each of these listening sessions. Register here.

 

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