The federal Fair Labor Standards Act (FLSA) was enacted in 1938, in the middle of the greatest economic depression this country has ever seen, in order to protect the rights of workers who might otherwise be vulnerable to exploitation by their employers. In addition to defining overtime and requiring employers to pay all their hourly workers one and one-half times their normal hourly rate for all the overtime they spend working, the FLSA also allowed certain employees to be held exempt from overtime compensation if they earned a salary of $23,660 per year.
In addition to the salary requirement, the FLSA classifies employees as overtime exempt based on particular job responsibilities. This mandate divides exempt employees into three categories: administrative, covering employees who perform primarily office work and provide assistance directly to an executive; executives, meaning those who spend the majority of their time at work managing other employees; and professionals, whose jobs require them to have a certain set of skills or level of education in order to perform their jobs.
The current salary limit of $23,660 per year was substantial at the time it was enacted, but now it’s barely enough to make a living on and makes up just half the average American household yearly income. In order to take this inflation into account, the U.S. Department of Labor (DOL), has proposed a new rule that would double the salary requirement for overtime exemption to $47,476 per year.
Unfortunately, Big Business still holds most of the leverage in the courts and in legislation, as shown by the 22 states have banded together to issue a preliminary injunction against the DOL’s new rule.
A Texas federal judge made that state the latest to join those that are actively working against the DOL’s proposed salary extension. According to the courts, the new rule would mean approximately 4 million American workers would no longer meet the requirements for overtime exemption, requiring employers all over the country to restructure their work load and schedules.
Opponents of the plan, including the U.S. Chamber of Commerce and other business interest groups, argue the new rule would be disastrous for American businesses because it would drastically increase their employment costs, resulting in more costs for both businesses, and state and local governments.
The federal courts used the existing requirements for specific job responsibilities to back up their claims that the DOL’s new rule is overly restrictive to businesses and not what Congress intended when it created exemptions for the overtime requirements. Despite the fact the FLSA has always included a minimum salary requirement, the federal judges have ignored that fact and insisted that Congress intended for the employees’ duties to be the real test for overtime exemption. The judges have further claimed that only Congress can make adjustments to the FLSA.
The DOL continues to insist it does have the power to modify the FLSA in order to protect American workers and that it will continue considering its legal options in order to make this new rule a reality for all Americans.The Chicago overtime lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims against large retail chains such as Petsmart, Officemax, Staples, Smart & Final, Apple, Walgreen’s, CVS, Urban Outfitters, GAP, Gem Financial, Abercrombie & Fitch, Limited, Forever 21, Macy’s, Target, JC Penney’s, Lowes, Burlington Coat Factory, Marshalls, TJ Max, Victoria’s Secret, Nieman Marcus, Saks Fifth Avenue, Best Buy, Home Depot, Apple, Best Buy, Sears, K Mart, J.C Penney, Walmart, Costco, PetSmart, REI and other retail chains for misclassifying employees as managers, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, failing to pay for time spent on security checks, and otherwise failing to pay workers for overtime and other wages. If you are the victim this practice call us at one of our offices near Cicero and Palatine at (312) 869-4095 or contact us online.