It is well past time to update the criteria for overtime pay exemption Ross Eisenbrey of the Economic Policy Institute argues well in the New York Times: It's Time to Update Overtime. Eisenbrey proposes that President Obama increase the minimum salary threshold for an employee to be exempt from overtime pay requirements from its present $455 to $970 per week. This would restore the threshold's proportionality to what it was in 1975.
There are three criteria that must be met for an employee to be exempt from overtime pay requirements; if the employee does not meet all three, they are not exempt and must be paid overtime. The three criteria are as follows:
(1) They are paid on a salary-basis. Payment on a salary-basis means this according to the U.S. Department of Labor:
Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. Subject to exceptions listed below, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.
(2) Their actual job duties cause their job to be within one of the identified exempt job categories: Executive, Administrative, Professional, Computer & Outside Sales Employees.
An employee's job title, such as "manager", does not necessarily mean that they are exempt from overtime pay requirements. There have been numerous suits by employees seeking their overtime pay because they were deemed exempt from it based on their job titles: Store Managers at Harbor Freight Sue for Unpaid Overtime; Rite-Aid Store Managers Settle Overtime Suit for $20.9 Million; Assistant Managers Sue Dollar Tree for Overtime & Minimum Wages; Claiming They Were Misclassified Managers Sue for Overtime; and Managers at AT & T Sue for Overtime being a few examples.
(3) They are paid a salary of at least $455 per week.
Based on a 40 hour workweek $455 equals $11.38 an hour. Eisenbrey argues that the minimum salary level should be increased to at least $970. He points out that $970 is 1.6 times today's median weekly wage of $670 and that when President Ford increased the minimum salary threshold back in 1975 to $250 per week that sum was 1.6 times the median weekly wage of 1975. So Eisenbrey's good argument is that the minimum salary threshold should be restored to the same proportion as it was in 1975. It's a good argument and President Obama should follow the suggestion.
Lexington, Kentucky overtime and wages lawyer Robert Abell represents individuals and employees seeking to recover the wages and/or overtime they've earned but not been paid; contact him at 859-254-7076.
