New Overtime Rules on the Horizon

President Barack Obama signed a presidential memorandum last week directing the Labor Department to develop new overtime rules. While the memorandum does not specify what the rules or new salary thresholds should be, it is directed to salaried workers who make more than the $455 a week threshold set by President Bush in 2004 who are ineligible for overtime because they are designated as management even though their supervisory duties are minimal. The new rules would make more workers eligible for time-and-a-half pay for their extra hours of work.

Under current rules, if an employer declares that an employee’s primary responsibility is executive, such as overseeing a cleanup crew, then that worker can be exempted from overtime. The new rules could require that employees perform a minimum percentage of “executive” work before they can be exempted from qualifying for overtime pay.

Jared Bernstein, the former chief economic adviser to Vice President Joseph R. Biden Jr., and the former executive director of the White House Task Force on the Middle Class, embraced Mr. Obama’s move. “I think the intent of the rule change is to make sure that people working overtime are fairly treated,” he said. “I think a potential side effect is that you may see more hiring in order to avoid overtime costs, which would be an awfully good thing right about now.”

Marc Freedman, executive director of Labor Law Policy for the U.S. Chamber of Commerce, shared an opposing option stating, “Similar to minimum wage, these changes in overtime rules will fall most harshly on small and medium-sized businesses, who are already trying to figure out the impact of Obamacare on them.”

A proposed rule is not expected until the fall.