The DOL Addresses ‘White Collar’ Slavery

*The Dept. of Labor issued the final rule on May 19, 2016. The DOL  more than doubled the salary threshold for eligibility for overtime for full-time salaried workers — lifting it from $23,660 to $47,476 per year. That means some 35 percent of full-time salaried workers, based on their pay, will now be eligible for overtime. PGB

The Fair Labor Standards Act, 29 CFR Part 541, makes it possible for employers to impose a kind of slavery on poorly-paid salaried employees who are exempt from the protections of the act because they are classified as “white collar” workers.

However, the U.S. Department of Labor this week released proposed amendments to the FLSA  “white collar” exemption provision that would, if adopted, eventually eliminate the exempt status of an estimated  21.4  million so-called “white collar” employees.

The FLSA exemption now applies to employees whose job duties primarily involve executive, administrative, or professional duties and who  earn a salary of at least $455 per week or $23,660 a year.  The DOL’s proposed regulations dramatically increase the minimum salary threshold for exempt status workers to $970 per week or $50,440 per year. This represents the 40th percentile of earnings for all full-time salaried workers throughout the United States.

Low-level white collar workers are ripe for exploitation, especially during difficult economic times when jobs are scarce.  During the Great Recession, many employers forced poorly-paid white collar workers to work endless or erratic unpaid overtime hours  to compensate for lay-offs or short staffing.  This caused predictable stress and burnout, with all of the attendant problems for individuals and families.  The “white collar” exemption is particularly brutal for single parents (mostly women) who must schedule and pay for child care.

The DOL has not updated the “white collar” salary level since 2004.  To prevent the proposed new salary level from becoming outdated, the DOL’s proposes  automatically updating the salary level each year to reflect the applicable 40th  percentile of earnings. 

In addition to the salary test, employees must meet a minimum test related to their primary job duties to be considered white collar workers.   The “duties” test is another way for employers to exploit low-level workers.  The DOL does not address the “duties” test in its  proposed new regulations but is seeking comments on whether the test is working as intended to screen out employees who are not bona fide “white collar” employees.  “{I}n particular, the Department is concerned that in some instances the current tests may allow exemption of employees who are performing such a disproportionate amount of nonexempt work that they are not [qualified] employees in any meaningful sense,” writes the DOL in a  295-page report.

The DOL has invited public comment on these proposed regulations. Business groups have condemned the proposed regulations and law firms that represent employers  are actively urging their clients to file comments.

The FLSA  was passed  in 1938 to both guarantee a minimum wage and to limit the number of hours an employee could work without additional compensation. Non-exempt employees are entitled to overtime pay at a rate of not less than one and one-half times the employee’s regular rate for hours worked over 40 in a workweek.  The DOL states the “white collar” exemption was premised on the belief that the exempted workers earned salaries well above the minimum wage and enjoyed other privileges, including above average fringe benefits, greater job security, and better opportunities for advancement, setting them apart from workers entitled to overtime pay. The current federal minimum is $7.25 per hour.

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