Federal Bill Proposed to Extend Overtime to More Workers

Last week, Sen. Tom Harkin (D-Iowa) proposed the Restoring Overtime Pay for Working Americans Act, a bill that would make more workers eligible for overtime by raising the salary level required for employers to classify workers as exempt employees under the Fair Labor Standards Act (FLSA). The bill has been referred to the U.S.  Senate Committee on Health, Education, Labor, and Pensions for further review.

The bill would more than double the current salary level requirement for exempt employees of $455 per week or $23,660 per year to $1090 per week or $56,680 per year in increments over three years. The threshold would be indexed to inflation after that. The bill would also gradually increase the salary threshold required for workers to meet the Highly Compensated Employee exemption from $100,000 to $125,000 per year, and then be indexed to inflation.

The bill also deals with the “primary duty” requirement for exempt employees. Formerly, primary duty was understood to mean that the worker performs exempt functions at least half of each workweek. However, 2004 regulation changes eliminated the 50-percent threshold. Harkin’s bill would reinstate the 50-percent threshold.

Finally, the bill would enact penalties for employers who violate the FLSA’s recordkeeping requirements. The penalties would be similar to those currently faced for minimum wage or overtime violations.

This bill is separate from the U.S. Department of Labor’s efforts to revise the FLSA’s overtime regulations called for by the president in March of this year. Earlier this month, the DOL announced that it expects to issue proposed regulations in November 2014. We will keep you updated on both the status of this bill and the regulation changes. In the meantime, we recommend employers review their exempt employee classifications for compliance with current law. For more information access our FYIs Exempt Employees: Salary Basis Test and Exempt Employees: Duties Test.