Local Employment Attorney Warns of Impact From Dept. of Labor Change to Overtime Rules

When President Obama signed a memorandum on March 13, 2014, directing the Labor Department to create new rules regarding which employees qualify for overtime pay, it immediately caused concern for many local employers, say attorneys at Skoler, Abbott & Presser, P.C., a leading regional labor and employment law firm.

“Under current rules of the Fair Labor Standards Act (FLSA), salaried workers earning more than $455 a week, or $23,660 a year, are not eligible for overtime pay if a certain percentage of their work is considered supervisory,” explained Attorney Timothy F. Murphy. “The President’s announcement will likely affect three areas: raising the minimum salary level for exempt status, revising the duties that qualify an employee for exempt status under the executive exemption, and changes to the definition of an exempt computer professional.  A change to the duties and minimum salary level could mean that millions of workers would be eligible for overtime pay.”

The FLSA defines salaried employees as those whose positions are classified as executive, administrative, professional or outside sales. These so-called “white-collar” workers are currently exempt from the FLSA’s general requirement that workers be paid time-and-a-half for all hours worked in excess of 40 each week. “Tightening the definition of who qualifies for overtime pay will have the greatest impact on small and medium-size businesses,” Attorney Murphy added. “With the majority of businesses in western Mass. falling into the small-business category, the number of workers in this area who would become eligible for overtime could be significant.”

Employees in many industries are expected to be impacted significantly by the proposed changes, including those working in retail, restaurant, hospitality, health care, information technology, and financial services, to name a few. Murphy was quick to point out that the precise financial impact cannot be calculated at this time. That, however, is not keeping many in the business community from worrying.

“All revisions to these regulations must go through a process that allows for employers to provide comments on the proposed changes, so we’ll just have to wait and see what the precise impact of these new regulations will be,” said Murphy. “But I’ve already heard from employers who are concerned that the associated costs of this change will force them to reduce employment or otherwise curtail economic growth.”

Timothy F. Murphy, partner in the firm, represents and advises both union and non-union employers in a wide range of labor and employment matters. He regularly represents employers in matters before state and administrative agencies and courts. His work includes assisting employers to remain union-free, defending unfair labor practices, negotiating collective bargaining agreements and handling grievance arbitrations. He is a frequent contributor to business and human resource publications and a contributing author to the Massachusetts Employment Law Letter.