August 2003

Revised federal wage rules to clarify OT eligibility

Figuring out which of your employees is entitled to overtime pay will become easier if the proposed rules updating the antiquated Fair Labor Standards Act are enacted.

Following a 90-day comment period that ended June 20, the Department of Labor is reviewing more than 77,000 comments concerning proposed changes to the white-collar exemption rules, Section 541 of the FLSA, which affect almost all employers in the United States.

The regulations that determine which employees must be paid overtime for work exceeding 40 hours during a one-week pay period are more than a half-century old and the subjective “tests” that allow a worker to be excluded from overtime pay no longer apply, according to the DOL.

“More than one million American workers could be eligible for overtime pay but are not currently because regulations have not kept pace with the changing workforce,” commended Sue Meisinger, president and CEO of the Society for Human Resources Management (SHRM), an organization of 170,000 human-resources professionals. “The changes proposed by the DOL will mean more money in the pockets of unskilled employees who are currently salaried and not receiving overtime pay,” she said.

SHRM receives more than 8,000 calls a year on exemption-status issues, a spokesperson for the organization told Chiropractic Economics. “The proposed changes would streamline the criteria used for determining exempt/non-exempt status by utilizing an objective test that takes both the salary and the job duties into account,” said Meinsinger.

The proposed changes in rules are administrative, SHRM said, but they rely on Congressional funding to be implemented. Recently, a bill was introduced into the House that would have essentially killed the overtime overhaul. The House bill was defeated. “The House of Representatives sent a clear message that the nation’s overtime rules need to be updated to protect millions of low-wage workers,” said Secretary of Labor Elaine L. Chao.

A similar action is being introduced to the Senate and merits watching, said SHRM.

According to SHRM, DOL will cull through the responses it received during the first posting of the proposed rules then make changes and will most likely repost revised rules, with a 60-day comment period.

Virtually all employees in the United States are covered by the Fair Labor Standards Act.

For more information on the law, go to www.dol.gov.

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