Tag Archives: overtime

Department of Labor Weighs In on New Age of Salary Servitude for ‘Executives’

Today’s post comes from guest author Roger Moore, from Rehm, Bennett & Moore.

Most of the U.S. workforce has the right, provided by the Fair Labor Standards Act, to be paid overtime for working more than 40 hours in a week. Before the federal government set rules for overtime, most employees worked longer hours, and millions of Americans worked six or seven days a week, as Chinese factory workers do today. Salaried workers also have the right to be paid a premium for overtime work, unless they fall into an exempt category as a professional, an administrator, or an executive. Exempt employees must be skilled and exercise independent judgment, or be a boss with employees to supervise. However, many companies have worked to get around these overtime rules by classifying employees like cooks, convenience store employees or restaurant workers as “managers,” “supervisors,” or “assistant managers or supervisors,” so that their employer can deny them overtime under this exception. 

In May 2016, the Department of Labor issued its final rule establishing a new minimum salary threshold for the white-collar exemptions (executive, administrative and professional) under the Fair Labor Standards Act. This new threshold of $913 per week ($47,476 annualized) more than doubles the current minimum weekly salary threshold of $455 per week ($23,660 annualized).  While that may seem like a huge increase, the old threshold level is only $2 a week above the poverty level for a family of four. Twenty-one states have filed suit to challenge this rule, citing the rule will force many businesses, including state and local governments, to unfairly and substantially increase their employment costs. 

The old rule allowed companies to put employees on “salary” at a low rate and require them to work sometimes significant overtime. The fact that so many government entities are concerned about this new rule substantially increasing their employment costs underscores the extent to which even government entities have taken advantage of employees in this fashion. Can you imagine earning $25,000/year and having to work 50, 60 or 70 hours a week? Even at 50 hours a week, that equates to an hourly wage of only $8.01!

In the first year, the department estimates that the new rule may affect, in some manner, over 10 million workers who earn between $455/week and the new $913/week threshold.  

The median worker has seen a wage increase of just 5 percent between 1979 and 2012, despite overall productivity growth of 74.5 percent (Mishel and Shierholz, 2013), according to the Economic Policy Institute. One reason Americans’ paychecks are not keeping pace with their productivity is that millions of middle-class and even lower-middle-class workers are working overtime and not getting paid for it. Before this rule change, the federal wage and hour law was out of date. This change purports to correct this modern day servitude that the law – for the last 30 years – has carved out a huge exception, allowing workers to be taken advantage of simply by assigning them a title and paying them a salary.  

 

Sources:

FLSA – Minimum Wage & Overtime

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, and youth employment standards. The FLSA establishes a federal minimum wage of $7.25 per hour and requires overtime pay at a rate not less than 1.5 times the regular rate of pay after 40 hours of work in a workweek for covered nonexempt workers. Many states also have minimum wage laws and where a worker is subject to both federal and state minimum wage laws, the employee is entitled to the higher minimum wage.

Bona fide administrative, executive, professional, and outside sales employees are exempted from minimum wage and overtime pay under Section 13(a)(1) of the FLSA. However, a job title does not exempt an employee from those provisions. Instead employees must meet certain tests regarding their job duties and receive a salary of at least $455 per week ($23,600 per year). President Obama drew attention to the low salary standard in a 2014 Presidential Memorandum directing the Department of Labor to update the minimum wage and overtime standards. Effective December 1, 2016, the standard salary level will increase to $913 per week and will automatically update every three years to reflect economic changes.

Many employees are often unaware of minimum wage and overtime pay laws until it is too late. Generally, under the FLSA an employee cannot recover back pay more than two years after it is due to him. However, if the employer willfully violates the FLSA, an employee has three years to assert his claim. To file a complaint under the FLSA, contact the U.S. Department of Labor’s Wage and Hour Division.

The Job: Insufficient Sleep Is A Compensable Condition


Today’s post comes to us from our colleague Jon Gelman of New Jersey.

The National Sleep Foundation recommends that U.S. adults receive, on average, 7–9 hours of sleep per night; however, 37.1% of adults report regularly sleeping <7 hours per night. Persons reporting sleeping <7 hours on average during a 24-hour interval are more likely to report unintentionally falling asleep during the day at least 1 day out of the preceding 30 days (46.2% compared with 33.2%) and nodding off or falling asleep at the wheel during the previous 30 days (7.3% compared with 3.0%). Frequent insufficient sleep (14 or more days in the past 30 days) also has been associated with self-reported anxiety, depressive symptoms, and frequent mental and physical distress (4).

Even short term sleep duration is linked with:

  • Increased risk of motor vehicle accidents
  • Increase in body mass index – a greater likelihood of obesity due to an increased appetite caused by sleep deprivation
  • Increased risk of diabetes and heart problems
  • Increased risk for psychiatric conditions including depression and substance abuse
  • Decreased ability to pay attention, react to signals or remember new information

Such findings suggest the need for greater awareness of the importance of sufficient sleep. Further information about factors relevant to optimal sleep can be obtained from the National Sleep Foundation (http://www.sleepfoundation.org) and CDC (http://www.cdc.gov/sleep).