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Modernizing overtime rules for white-collar workers: an update

In a simpler era of America's economic life, the distinction between white-collar workers and blue-collar workers made some sense. White-collar folks generally worked in offices and were salaried. Blue-collar folks generally worked in factories and punched a clock.

Now, however, collars come in various shades of gray. Workers such as administrative assistants and convenience store managers may be salaried. But old rules on who is exempt from overtime laws have kept many such workers working long hours without the benefit of overtime pay.

That is why, at President Obama's direction, the Department of Labor (DOL) has proposed a new rule on overtime pay. In this post, we will update you on the proposed rules status.

Income threshold

On June 30 of last year, DOL proposed a rule that would increase the income level at which employees become exempt from time-and-half pay for work over 40 hours in a week. Under the proposed rule, the amount would increase from $23,600 to $50,440.

The Obama administration contends that this change would simplify federal overtime protections. The change would also clarify that only certain highly compensated employees (professional, executive or administrative) are exempt from those protections.

Supporters of the revised rule contend that it could extend overtime protection to an additional 5 million workers. As we noted in our April 11 post, economists are in sharp disagreement on the possible effects.

It is possible, for example, that employers could reclassify many workers from salaried to hourly and reduce their base rate of pay. Or employers could hire more workers in order to avoid having to pay more overtime.

Planning for the change

The actual effect that the new rule would have is therefore somewhat uncertain. There are also several more procedural steps before a new rule can take effect.

The new rule may be officially published around Labor Day. If that happens, it would take effect just before the election.

The political dynamics could of course change considerably by then. There have already been bills introduced in the House and Senate to stop the proposed new rule. And even if the rule takes effect, there would very likely be legal challenges to it.

But proactive employers are already considering how to comply with the new rule. They are trying to determine what types of compensation plans make the best business sense, given the change in overtime rules. A key part of this is identifying positions that may need to be reclassified.

How this affects you

You don't have to wait until a new overtime rule becomes final in order to assert your rights under existing employment laws.

If you put in long hours without the benefit of overtime pay, you may have been denied the pay you should have had coming to you. No matter what the color of your collar is, a skilled employment law attorney can advise you about how to proceed.

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