Bill Introduced to Expand Overtime Pay

July 16, 2014

AA017956In late-June, Sen. Tom Harkin (D-Iowa) introduced legislation, the Restoring Overtime Pay for Working Americans Act which would make several major changes to the Fair Labor Standards Act, including an increase to the overtime salary threshold, the “highly compensated” employee exemption and the duties test for employees, thereby expanding the number of salaried workers eligible for overtime pay.

The bill would make a major jump in the salary threshold above which even those deemed by the employer as “executive, administrative and professional” still qualify for overtime pay. The salary threshold currently is $455 per week and Harkin’s bill would increase it to $1,090 per week. The increase is phased-in with a bump to $665 per week one year after enactment, $865 per week in the second year, and $1,090 in the third year following enactment. Following the third year, Harkin’s proposal would index the threshold to inflation.

S. 2486 also changes the exemption threshold for “highly compensated” employees per FLSA law from the current exemption level of $100,000 to $125,000 over three years. This threshold would be indexed for inflation.

The legislation also would change how an employee’s primary duties determine whether or not he/she is exempt from overtime pay. Harkin’s proposal would require that, in order for an employee to be deemed exempt, he/she must spend at least 50 percent of his/her time on exempt duties such as supervising other employees.

Harkin’s bill tracks with efforts of the administration to increase the overtime pay threshold through the regulatory process. In addition to these sweeping changes, S. 2486 also would expand the penalties under FLSA to include an employer’s failure to properly maintain records relating to wages.

Please click here to read the legislation.