Obama Proposes Shrinking White-Collar Exemptions

President Obama has proposed expanding the availability of overtime pay, directing the Labor Department to do its first overhaul of Fair Labor Standards Act (FLSA) regulations in 10 years.

The president signed a memorandum on March 13, 2014, instructing the Labor Department to update regulations about who qualifies for overtime pay. In particular, he wants Labor to raise the threshold level for the salary-basis test from the current $455 per week in order to account for inflation. The threshold has been raised just twice in the past 40 years. He would not specify the exact amount the threshold should be raised.

“Unfortunately, today, millions of Americans aren’t getting the extra pay they deserve. That’s because an exception that was originally meant for high-paid, white-collar employees now covers workers earning as little as $23,660 a year,” Obama said in remarks on overtime pay.

The memorandum also suggests that both the primary duties and pay of some exempted employees do not truly fit in the executive, administrative and professional employees exemptions, referred to as the white-collar exemptions.

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