Retail shops, fast food restaurants, convenience stores, and other similar establishments primarily hire hourly workers. Under the Fair Labor Standards Act (FLSA), all hourly workers must receive time-and-a-half for every hour they work in excess of 40 hours per week. Since many of these businesses rely on overtime hours instead of hiring and training additional staff, the FLSA overtime provisions are extremely important to make sure these workers receive fair compensation for their work.
The hourly workers need direction, however, so businesses must also hire managers, shift leaders, and other supervisors. Many of these managers receive a salary—albeit a low one—instead of an hourly wage. If a salaried employee is considered “managerial,” they may be considered exempt from FLSA’s overtime requirements. This means that these managers may work well over 40 hours per week on a regular basis without any additional overtime compensation. FLSA only provides protection for managerial employees who receive an especially low salary, as employees that receive a salary of less than $455 per week may not be exempt from the overtime requirements.
Obama Announces Executive Order on Overtime
In March, President Obama announced his intention to sign an executive order to adjust FLSA overtime provisions. Prior to signing the order, the president stated that the overtime exemptions were “originally meant for high-paid, white-collar employees” and they now apply to “workers earning as little as $23,660 a year.
The executive order instructs the Department of Labor (DOL) to update and modernize overtime exemptions under FLSA in order to “address the changing nature of the workplace.” Though the order does not specifically state any required changes, one revision is expected to be an increase in the minimum salary threshold for exemptions under FLSA, meaning that managers and other employees who receive over $455 may now be guaranteed overtime pay. No exact new threshold was suggested or determined, however President Obama did imply the change would affect “millions” of Americans.
Additionally, the DOL is expected to reexamine what constitutes a “managerial” or “non-managerial” employee under FLSA. Many managers and other supervisors often perform the same duties as hourly workers in addition to their managerial duties, and this may now be taken into consideration when determining exempt status.
Supporters of the new overtime initiative claim shifting more corporate money into the hands of workers will stimulate the economy, while critics state the changes will only put additional strain on businesses and force them to cut back employees’ hours. While the impact on the economy remains to be seen, once the new FLSA changes take place, employees should be aware of their new exempt status under the law and any new rights to overtime pay. If employers fail to adjust the exempt status of workers according to the new laws, they should be held accountable for all unpaid wages.
Though the new law has not yet taken effect, many employers violate FLSA provisions on a regular basis. If you believe your employer has violated wage, hour, or other labor laws, do not hesitate to contact the Pershing Square Law Firm today for help.