President Obama Orders the Department of Labor to Modernize Overtime Rules

by Cozen O'Connor

In a White House ceremony on Thursday, March 13, 2014, President Barack Obama signed a memorandum ordering the Secretary of Labor to “propose revisions to modernize and streamline the existing overtime regulations” governing the Fair Labor Standards Act (FLSA). The memorandum is available here. Although the president did not direct specific changes, he clearly stated that the goal of any regulatory changes would be to make more workers eligible for overtime pay under federal law. The president’s directive is expected to lead to proposed rules that would require employers to pay overtime to millions of workers who are currently classified as exempt employees. All Department of Labor (DOL) proposals that spring from the directive must go through the formal rule-making process and will be subject to public comment before being implemented, but employers should prepare for a regulatory fight in 2014 and new overtime rules in place by 2015.

Changes Expected to the Threshold Amount for Salaried Employees

Under existing FLSA regulations, last updated in 2004, salaried employees who earn at least $455 a week ($23,660 a year) and work in certain specified job categories (the most common are executive, administrative and professional employees) are exempt from the FLSA’s overtime requirement. In a Fact Sheet issued by the White House after the president signed the memorandum, the administration said that the $455 threshold has “failed to keep up with inflation, only being updated twice in the last 40 years and leaving millions of low-paid, salaried workers without these basic [overtime] protections.” The Fact Sheet noted that the threshold would leave a worker with a family of four below the poverty line. It is available here. The administration is expected to propose a significant increase in the threshold amount and perhaps to tie further increases in the threshold to inflation, automatically raising the amount every year without separate rulemaking. In a White House briefing before the presidential memorandum was issued, a member of the President’s Council of Economic Advisors noted that there are more than three million employees who would be covered by overtime rules if the threshold had kept pace with inflation. The presidential memorandum did not set a new threshold amount, however, so we will not know how significant the increase will be until formal proposals are released later this year.

Other Changes Could Pose Challenges for Employers

Although an increase in the minimum salary level will require overtime pay for more employees, another challenge for employers could occur with changes to the “duties test” for exempt workers. Under the FLSA, the DOL is authorized to set the criteria for which workers’ job duties qualify for the executive, administrative and professional exemptions. DOL regulations also control the duties required to qualify for other common exemptions, such as computer professionals and outside or inside salespersons. Changes to the duties tests for these exemptions could be proposed, including a requirement that an exempt employee spend a percentage of his or her working time performing job duties that fit within the categories. When the new proposed regulations are released, employers will need to assess whether the proposals will alter which of their employees can be classified as exempt.

Next Steps

Updating the overtime rules requires a formal regulatory process and the initial work of revising the regulations goes to the Department of Labor. Secretary of Labor Tom Perez can be expected to move swiftly on the president’s instructions, but the formal rule-making process gives employers and the public the opportunity to provide comments that the DOL must then take into account before final rules are adopted. Further updates will be distributed as the process moves forward. In the meantime, we are happy to discuss with you potential impacts of any proposals and to assist you or your organization in preparing comments for the DOL’s review as part of the rule-making process.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cozen O'Connor | Attorney Advertising

Written by:

Cozen O'Connor

Cozen O'Connor on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.