Expansion Of Overtime Pay Exemptions Hurt White Collar Workers

Expansion Of Overtime Pay Exemptions Hurt White Collar Workers

Overtime pay is presently being debated in the halls of the Department of Labor. New regulations would offer more exemptions to the rules, as well as set new standards for the department’s duties test. Having brought the issue to the floor for debate, and having drafted tentative changes, the regulations are now in the input stage.


Overtime Pay Exemptions

Tests To Determine Exemption

There are presently three specific tests that must be met in order to determine that an employee is exempt to receive overtime pay. The first of these is that the employee must be a salaried employee, not paid by the hour. The salary level test states that employees must earn above a specified dollar amount per week to be considered exempt.

Finally, there is the duties test. This test states that if the employee performs specific duties, they are exempted from receiving overtime pay. These duties must be executive, administrative or professional in their core characteristics. The new law sought t be drafted into effect in 2016, states that if the employee does not possess the status or authority within the company, they cannot be exempted from overtime pay.

Duties Redefined

The point in the new regulations that is the core of the present debate is the exemption surrounding executive or administrative duties. The issue at hand entails the reclassification of millions of workers. At present if the job duties of these workers resembles executive, administrative or professional tasks, the employee does not qualify to receive overtime pay.

The debate is that many employees may sometimes perform some of these tasks, but they seriously lack in the standing within the hierarchy of the company to enact the type of power that would classify them as administrative or executive. No power to make changes or enact rules within the company does equate to the ability for employers to exempt the employee from overtime pay.

Input is being sought by the Department of Labor as to what companies and corporations feel about the duties test. Specifically which level or status of employee should get overtime pay, and which ones are above basic workers and managers and therefore qualify for overtime.


Loss Of Pay

Loss Of Pay For Many

It is felt that the redefinition of the duties test will exempt thousands, maybe millions, from receiving overtime pay. The new regulations will redefine the education requirements as well as administrative duties that are considered exempted.

For instance, a paralegal does not have the stringent educational requirements as a lawyer or judge, but under the new regulations will be exempted to overtime pay like their higher paid and educated peers.

What is problematic is that the lines that presently separate professional jobs from white collar jobs is being seriously watered down and will eventually fade into history. These better paid, but lesser educated workers do not have the same professional status or pay of the individuals required to attain far greater levels of education.

Limited Scope Of Regulations

When drafting these new regulations, the Department of Labor has only considered a very limited number of workers. These individuals rank at only about 600,000 workers. There are millions of workers in the present workforce.

This issue is that these 600,000 workers have associate’s degrees and are exempted because of the core nature of their duties. What is estimated is that companies will redefine their workforce and put more people on a salary in order to reach the exempt status.

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Congressional Input

Congressional Input

The Congress has also weighed in on this matter. They feel that while te old regulations are a bit outdated and need revamping, that the protections offered to millions of white collar workers concerning overtime pay should not be changed.

What is cited is stalled growth in both wages and the economy that would make this type of regulation change favorable for the larger companies, but would seriously hurt families and lower level white collar workers. Even with the proposed section of the regulations that seeks to raise salaried employees pay in order to make them exempt would but a huge dent in the buying power of millions.

What Does It Mean?

What these new regulations seek to put into effect is that any employee making over $65,000 per year will assuredly be exempted to overtime pay. This also includes anyone making more than this amount as well.

In terms of basic salaries, the individuals who make $425 or less per week will still get their overtime pay (this comes to about $22,100 per year). It is projected that these new amounts will propel companies to pay more in order to avoid overtime which will cost them more in the long run.

Whether or not these regulations are a positive move in the right direction is yet to be determined. Even the Congress believes this will do more harm than good to the American worker and his/her family.



Credit for this small business article goes to NECHES FCU, Port Neches, TX.

Neches FCU is a texas credit union and has an awesome team of professionals ready to service all members. When the doors open at any of the 9 service outlets, the mission of “Ultimate Member Satisfaction” becomes the driving force for every employee. They are known for a personal, dynamic and fast-paced work atmosphere, delivering a memorable service experience, and where all members are known by their name.

Neches Federal Credit Union has approx. $438 Million in assets with over 45,000 members. Neches is recognized by members and the business community as one of the top credit unions in texas and an actively involved partner, helping our Family, Friends and Community!