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Obama Seeks to Expand Overtime Coverage to Previously Exempt Employees

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On Thursday March 13, 2014, President Obama ordered the U.S. Department of Labor to revise applicable regulations governing overtime pay to expand eligibility for potentially millions of employees to receive overtime pay when they work in excess of 40 hours in any given week.

According to the Obama White House, as many as 88 percent of salaried workers are not guaranteed overtime pay (i.e. time and one-half of a worker's regular rate of pay) because they supervise (even if minimally) other employees and earn more than the current cap of $455 a week. Under current regulations, these workers can be denied overtime pay — typically under the so-called “white-collar” exemption no matter how many hours they work each week. Thus, the “working supervisor” can be forced to work significant overtime (i.e. more than 40 hours per week) without receiving any additional compensation provided he or she makes a salary of at least $455 per week.

Although the winds of change are blowing, Obama's order does not prescribe a new salary threshold, and it does not take effect immediately. Instead, he has instructed Labor Secretary Thomas E. Perez to come up with a plan that would expand the number of workers eligible for overtime pay. During a period of public comment, business groups will almost surely seek to dramatically scale back this initiative by limiting the number of employees who might benefit from the change.