This post was contributed by Adam R. Long, a Member in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Harrisburg, Pennsylvania.
Yesterday, President Obama signed a Presidential Memorandum directing the Secretary of Labor to "modernize and streamline" the existing Fair Labor Standards Act (FLSA) overtime regulations, specifically with respect to the "white collar" exemptions. The FLSA’s white collar exemptions apply to covered professional, administrative, and professional employees. Last updated in 2004, the FLSA regulations on the white collar exemptions generally require that an employee receive a guaranteed minimum salary of at least $455 per week and meet one of the duties tests to qualify for an exemption to the FLSA’s minimum wage and overtime compensation requirements.
The Presidential Memorandum does not change the legal requirements currently applicable to employers. Instead, it merely directs the Department of Labor to "propose revisions" to the existing FLSA regulations. Any changes would need to go through a notice and comment period and the full rule-making process before taking effect. This process can take numerous months, if not years, to complete.
Until the Department of Labor issues proposed revisions to the existing FLSA regulations, we will not know how and to what extent the white collar exemptions may change. That said, comments made by the White House give some guidance on what we might expect. The Fact Sheet issued by the White House yesterday specifically references the $455 minimum weekly salary requirement. We can expect that any proposed changes would include a significant increase to the minimum salary threshold to qualify for these exemptions. Also, the Fact Sheet mentions convenience store managers, fast food shift supervisors, and office workers as examples of the types of workers the changes would address. As such, the proposed changes likely will reduce the applicability of these exemptions to lower-level supervisors and managers and office administrators. Finally, the Memorandum states that "[b]ecause these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage." To make millions of currently exempt workers eligible for overtime compensation, the changes to the regulations will need to be broad and significant.
It is important to note that the Presidential Memorandum, White House comments, and resulting media attention have made no changes to the current law or obligations on employers. However, we can now expect proposed regulations sometime during the remainder of the Obama administration that will propose significant changes to the current FLSA white collar exemptions. Stay tuned for more updates.