August 2004

Overtime! | Legal Ease

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by Philip J. Siegel
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The Fair Labor Standards Act (FLSA) is the federal law that requires employers to pay most employees in the United States at least the federal minimum wage (currently $5.15 per hour) for all hours worked, as well as overtime pay at time and one-half an employee's regular pay rate for all hours worked in excess of 40 hours during a workweek. However, FLSA also exempts employees who are executive, administrative, professional and outside sales employees from receiving overtime pay.

On March 31, 2003, the U.S. Department of Labor (DOL) proposed regulatory changes to FLSA overtime laws. DOL reviewed more than 75,000 public comments on its draft regulations before finally publishing its long-awaited rule April 23. The rule is intended to simplify and update current overtime requirements. The final rule significantly revises the 54-year-old "white-collar" exemptions for executive, administrative and professional employees and clarifies the existing regulations for outside salespeople and computer employees (such as computer system analysts, computer programmers and software engineers). The final rule does not address factory workers, other "blue-collar" workers or those covered by collective-bargaining agreements who always have been entitled to overtime pay and will continue to be. In addition, the revised rule does not cover a number of other issues employers face under FLSA, such as when compensable work begins and ends. The final rule is scheduled to go into effect Aug. 23.

An overview

The highlights of the changes to the overtime rules include an increase in the minimum salary level necessary to qualify for executive, administrative and professional exemptions from overtime pay. According to the current rule, an employee earning $155 a week can qualify as a "white-collar" employee and not be entitled to overtime pay. The new rule raises the minimum salary to $455 per week. As a result, employees who have exempt duties but are being paid less than $455 per week now will be...

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DOL's changes to employee classifications and overtime pay

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