Wage law updated to keep up with the times
By: Andrew Ameer
Opinions Editor
The minimum salary for exempt, non-hourly employees has not raised since 2004, when President Bush raised the bare minimum salary for exempt employees to $23,660 per year up from $8,600 per year where it had languished since 1975. This is all changing effective December 1 this year, thanks to a new ruling by the Department of Labor (DOL) that occurred back in May.
The new rule raises the minimum salary for employees that work more than 40 hours per week and are exempt from overtime to $47,476 annually.
The Fair Labor Standards Act (FLSA) requires overtime pay at a rate of 1.5 the employee’s normal earnings to be paid for any time worked over 40 hours per week. There are exceptions to this rule, which primarily affect so-called “exempt executives” who are exempt from the overtime rule because of the nature of the work they perform. There also exist exemptions for certain administrative, professional and computer employees.
This move will automatically extend overtime pay protections to more than 4 million workers in the U.S. Employees that work more than 40 hours per week right now and are classified as “Exempt,” will either receive raises to fairly compensate them for their time or work reduced schedules, allowing them to spend more time with their families away from work.
Opponents of the new rule argue that pushing the level too high could force retailers, fast-food joints and other business to cut employment or even go out of business. Some democratic members of congress favored an increase as high as $51,000, so the $47,476 is a compromise. Even still, it would need to raise to $51,168 be at the inflation-adjusted equivalent of the level set in 1975.
Prior to this ruling, employers were able to require certain workers to work far more than 40 hours a week and only compensate them as little as $23,660 per year, or $455 per week simply by assigning them the title of “Manager.” When President Bush raised the salary in 2004 he also eliminated the “Long duties” rule, which said that so-called “exempt executives” could spend no more than 40 percent of their time at work performing duties that were not that of an executive, for example waiting tables or stocking shelves. They needed to perform other executive tasks, like directing the work of other employees or managing the enterprise.
One of the most important aspects of the new rule is a provision that raises the minimum every three years so that we don’t experience an absurd lapse like we did from 1975-2004, and from 2004-2016.
This new rule will be welcome to exempt white collar workers not yet earning the new minimum salary. Over the years people are working harder and longer, and not seeing any pay increases. There is no real chance to get ahead. This gives people an opportunity to get into the middle class.
As an employee exempt from overtime, I can say that this ruling is almost universally welcomed among me and my working peers. The Obama administration made the right call on stepping up to defend the wages of the middle class white collar worker. I couldn’t imagine working 50 plus hours per week only to be compensated so poorly. Thankfully, most companies don’t pay their managers such a laughable wage as the $23,600 minimum that the government thought was sufficient until this past May, but there are always people who would take advantage of the rules and employees who find themselves with no other options.
