Under the federal Fair Labor Standards Act (FLSA), employees must receive one and one-half times their normal rate of pay for any “overtime” hours, i.e. any hours they work in excess of 40 per week. However, not all employees are subject to this overtime pay requirement. For instance, the FLSA expressly exempts “executive, administrative, or professional” (EAP) employees.
The FLSA does not actually define who is (and is not) an EAP employee. Instead, Congress left that task to the Department of Labor, which publishes and periodically revises regulations regarding employee classification. When the FLSA was first adopted in 1938, the Department looked to the duties an employee actually performed to see if they should be considered exempt. Later, the Department said an EAP employee must be paid on a “salary” rather than wage-hour basis. An employee must receive a certain minimum salary level.
Court Challenges Labor Department's Minimum Salary Threshold
This salary level has recently become something of a legal and political hot potato. Under Labor Department regulations established in 2004, an employee had to make at least $455 per week–or $23,660 per year–to meet the threshold for exemption. In other words, if you made less than $455 per week, the Department assumed that you should receive overtime pay.
But in March of 2014, then-President Barack Obama ordered the Secretary of Labor to “modernize” the regulations governing EAP employees. As a result, the Department published a new rule in May of 2016 that proposed to more than double the minimum salary threshold. Under the 2016 regulations, an employee had to earn at least $921 week ($47,892 per year) to be exempt from overtime under the FLSA.
Not surprisingly, many employers objected to this proposal. A number of private business groups and state governments, who are also subject to the FLSA, filed a federal lawsuit against the Department of Labor in Texas. Last November, the judge presiding over the case granted the state plaintiffs’' request for a preliminary injunction to prevent the new rule from taking effect nationwide.
In the meantime, of course, there was a presidential election. President Trump's administration recently weighed in on the overtime issue in two ways. First, on June 27, the Department of Labor announced it would reopen the rulemaking process and come up with a new, presumably lower threshold. A few days later, on June 30, the Department of Justice filed a brief in the Texas case defending its authority to set such a threshold. In his decision granting the preliminary injunction, the judge found the Department lacked “the authority to utilize a salary-level test” at all. But the Trump administration, like its predecessor, insists the threshold “has been used since the inception of the FLSA” and is a legitimate means of defining EAP employees.
Do You Have a Wage Hour or Overtime Case Against Your Employer?
Even as the courts and the new administration continue to sort out the federal overtime rules, it is important to remember there are state and city laws that can also affect a worker's rights in this area. If you believe that you have been wrongfully denied overtime pay and need to speak with an experienced New York employment law attorney, contact the Law Offices of Mahir S. Nisar in New York City or Long Island today.