On March 13, President Obama signed a presidential memorandum directing the Secretary of Labor to propose changes to regulations governing which employees are entitled to overtime pay under the Fair Labor Standards Act (FLSA).
While the memorandum did not detail exactly which parts of the regulations should be revised, the Department of Labor (DOL) is expected to change both the salary level and primary duty tests used to determine exemption from overtime pay mandates. Currently, an employee must be paid at least $455 per week to be exempt. DOL is likely to propose a significant increase in that threshold, possibly tying it to the Consumer Price Index or another inflation index. The primary duty test varies depending on which “white collar” exemption applies but generally requires that the employee actually perform managerial, supervisory, or other non-manual duties as a main part of his or her job. DOL is expected to tighten up the duty tests, possibly setting a specific percentage threshold for the amount of time that the employee performs the qualifying duties. AGC anticipates that both changes, if implemented, will have a significant impact in the construction industry.
DOL will likely begin the rulemaking process later this year, which will include an opportunity for public comments. A final rule is not expected for some time. (The rulemaking process took two years when these regulations were last revised in 2004.) AGC will continue to monitor the process and will comment appropriately when given the opportunity.
For information on the FLSA as it exists currently, visit the DOL website or the Labor and HR Topical Resources section of the AGC website. The primary category is “Compensation” and the secondary category is “Fair Labor Standards Act.”
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