President Barack Obama’s recent announcement that he would direct the Department of Labor to increase overtime protections for the nation’s workers suggest that more changes to the Fair Labor Standards Act are coming.
We think employers can expect even more scrutiny on these matters from their employees.
Business groups already are warning the decision could backfire on workers, but Obama pledged to work with both businesses and workers as the new rules are crafted.
The FLSA is already the subject of much litigation against employers: According to one analysis, wage-and-hour lawsuits have increased by more than 400 percent within the past two decades.
The FLSA’s current OT rules restrict any salaried employee making less than $455 per week from being classified as exempt.
Critics say that limit is too low: It means many employees making just under $24,000 per year are ineligible for OT pay even if they put in substantially more than 40 hours per week.
The administration also wants to close what it says is a loophole in the FLSA that lets employers treat many workers as overtime-ineligible managers, even if they’re performing much the same work as their hourly colleagues.
The nation’s business community is cautiously awaiting the new wage limit the administration will decide on – and whether it will model the proposed changes on California’s OT law, which puts greater restrictions on employers than the FLSA currently does.
If the administration adopts the California model nationwide, the process of determining whether a worker is exempt or nonexempt will become much more complicated, far more employees will end up being reclassified as nonexempt and employers will be dealing with much more litigation.
“Similar to minimum wage, these changes in overtime rules will fall most harshly on small- and medium-sized businesses, who are already trying to figure out the impact of Obamacare on them,” said Marc Freedman, executive director of Labor Law Policy for the U.S. Chamber of Commerce.
About the Author
Lon is the former publisher of the Colorado Springs Business Journal and Colorado Springs Military Newspaper Group.He has served in leadership roles at various newspapers in Iowa, Florida and Wisconsin. Lon received his Bachelor of Arts in Communications from the University of Wisconsin, Eau Claire and attended the Kellogg Graduate School of Management at Northwestern University. Earlier in his career, Lon spent several years as a sea captain and held a 100-ton Coast Guard license. Lon is a former rugby player, referee and administrator and now coaches under 13 year old kids. Lon has served on the boards of numerous community and business organizations including Colorado Springs Leadership Institute, Peak Venture Group, CS Quality of Life Indicators Business Index Committee, Junior Achievement and is a member of The Colorado Thirty Group. Lon was given the “Making the Pikes Peak region a better place to live work and play” award by the CS Chamber of Commerce, was the VFW Post 1’s business citizen of the year.