A New Game – Who is Exempt and Who Receives Overtime Pay?

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May 15, 2014

As you may have seen in several news reports, President Obama is today directing the Department of Labor to re-write the regulations that identify who is exempt from overtime pay requirements under the Fair Labor Standards Act. The Fair Labor Standards Act does not apply to executive, administrative and professional employees. There are certain minimum requirements to meet any one of these exemptions, but those minimum requirements have not been difficult to meet in most instances. We can now anticipate a change in those minimum requirements and an extension of overtime pay requirements to many more employees.

Obviously, this is just the beginning of a journey. We are not sure how the regulations will be re-drafted, and we certainly can anticipate litigation challenging any changes to the regulations that expand overtime pay requirements. This is not something that we need to respond to immediately, but it is something we need to watch to see if adjustments need to be made to ensure that certain types of positions are still considered exempt and not subject to overtime pay requirements.

We assume the target will be middle-level administrators and supervisors who are legitimately responsible for supervising a number of employees but do not exercise decision-making authority for the organization. This is always an area of questionable exemption because of the nature and scope of decision-making authority exercised by these positions.

For now, keep an eye on the news and polish your game piece because we will be up to our knees in a new game in the near future.

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