Authored by Alex Passantino
Earlier this week, Senator Harkin, along with eight Democrat co-sponsors, introduced the “Restoring Overtime Pay for Working Americans Act.” If it became law—a prospect that at this time appears highly unlikely—this proposal would increase the salary level required to qualify for the FLSA’s white collar exemptions from the current $455 per week to $1,090 per week over a three-year period, with the salary level adjusted upward each year thereafter. The proposal also would increase the level required for the highly-compensated employee test from the current $100,000 per year to $125,000 per year. In addition, the proposal would add a new sub-section to section 13(a) of the FLSA, defining “primary duty” as requiring an exempt employee not to “spend more than 50 percent of such employee’s work hours in a workweek on duties that are not exempt.”
For the entire history of the FLSA’s white-collar exemptions, the salary level and duties for exempt employees—including primary duty—have been established by the Secretary of Labor through regulations, as is required by the FLSA itself. Indeed, both the salary level and the percentage of time spent on non-exempt duties appear to be under consideration by the Department of Labor as it prepares its proposed regulations in response to President Obama’s Memorandum. Meetings held by the Secretary of Labor with a variety of outside groups indicate that DOL is actively considering these issues. The Department’s proposal—and its initial position on the salary level and primary duty test—is expected in November (see pp. 56-57).
It is unclear why these Senators determined that it was necessary to remove the Secretary of Labor’s authority to set the salary level and primary duty standards around the same time that the President directed the Secretary to exercise that authority. Perhaps the bill will be used to schedule a hearing on these issues in the Senate HELP committee? Perhaps the bill should be viewed as the Senators laying down their marker on the appropriate salary level?
In all likelihood, it is a combination of factors that went into the decision to propose this bill at this time. Regardless, employers should not lose sight of the fact that—at least this year—changes to salary levels and primary duty are going to be handled through the regulatory process.
N.B.: It is also worth noting that the bill contains a provision that would allow the Department of Labor to assess civil money penalties for violations of the recordkeeping provisions of the FLSA, something that is not the case under current law. Not surprisingly, recordkeeping violations frequently accompany the misclassification of an employee as exempt—or of an employee as an independent contractor.