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. Continue reading