What Overtime Rule Changes Could Mean to You

The White House wants to broaden overtime pay protections to more types of workers.

Back in late 2012, the Department of Labor (DOL) issued a press release when a Texas landscaping company agreed to pay more than $100,000 in back wages to employees for overtime pay they were owed. An investigation discovered that employees were paid a fixed bi-weekly salary that, in several instances, did not compensate for the long hours the employees worked.

"Workers in the landscaping industry are among the most vulnerable in the workforce," said Cynthia Watson, regional administrator of the DOL’s Wage and Hour Division in the Southwest, in 2012. "The Labor Department is committed to vigorously enforcing the law to ensure that all workers are paid for all hours worked, including any overtime compensation due."

Fast forward to the spring of this year. The Obama administration is pushing to revise overtime pay regulations. Under the Fair Labor Standards Act, non-management workers are entitled to extra pay for hours worked beyond 40 hours a week at 1.5 times their regular hourly wage. Although sometimes abused by some employers, this law has been relatively effective. But what about salaried workers in “management”, such as your administrative teams, operations supervisors, technicians or even crew leaders, quite possibly? The White House is looking to ensure that those types of workers are protected too.

As stated on the White House website, President Obama has instructed his Secretary of Labor, Tom Perez, to update regulations regarding who qualifies for overtime protection. The way it stands now, when a salaried worker falls below a certain threshold of $455 per week, he or she is entitled to overtime pay. However, only 12% of the salaried workforce is in that category. Another problem is that, much of the time, these salaried workers are doing the same work as the hourly workers in a company. Does this sound like the salaried managers in your company?

Tips on overtime rules

As scrutiny of employer/employee relations intensifies, it’s important to understand the rules you must comply with—namely rules converning overtime pay.

In the case of this Texas company from a couple years ago, it failed to compensate employees at 1.5 times their regular pay rates for overtime hours, i.e. over 40 in a workweek. However, additional minimum wage and overtime violations occurred when the employer made improper deductions from employees' paychecks for uniforms, broken tools and equipment damage. Investigators also found that several employees working as "crew leaders" were improperly classified as exempt from the FLSA's overtime provision and consequently denied proper overtime compensation.

Keep in mind that the FLSA does not limit either the number of hours in a day or the number of days in a week that an employer may require an employee to work, as long as the employee is at least 16 years old. Similarly, the Act does not limit the number of hours of overtime that may be scheduled. However, the Act requires employers to pay covered employees not less than 1.5 times their regular rate of pay for all hours worked in excess of 40 in a workweek, unless the employees are exempt. As pointed out, the Obama Administration is pushing to add more types of employees to the non-excempt camp.

For more information on FLSA and overtime pay requirements, visit the DOL website.