OvertimeImageWith great fanfare, President Obama announced a plan to potentially raise the incomes of white collar employees.  The proposed federal regulation would make white collar employees eligible for overtime pay after 40 hours worked if their salary is less than $970 per week or $50,440 per year.  The change is being implemented through Department of Labor (“DOL”) regulations, which are currently under review, and would not go into effect until after a comment and review period.  The proposed regulations only change the minimum guaranteed salary for those who have been considered exempt from overtime up to now.  The other aspects of the test for exemption, which relates to the duties performed, are not covered by the proposed regulations.  The change essentially raises the weekly amount which was last set in 2004 to what an inflationary increase would have done.

In Connecticut, the threshold has been higher than the federal level, but unless that is changed, federal law will be controlling on this aspect of the test for the exemption.

Additionally, in a major change from the past, the DOL is proposing automatic increases in the minimum salary level.  For the first time the minimum salary amount will be set to rise on its own without further regulatory action.

As a practical matter, the proposed regulations mean that employers who have employees classified as salaried and exempt from overtime making less than $50,440/year need to review the status of these employees and consider how to respond when the time arrives.  Fortunately, the new regulations are not likely to be implemented before 2016, so employers will have time to study and understand the final regulations when they are issued and be able to plan accordingly.  DOL has said it expects the change will result in as many as 5 million employees becoming eligible for overtime.

While it is likely that the rule will, in fact, be implemented as proposed, it is not entirely clear how employers will react.  Some may choose to control workers hours to keep them at or below 40 hours per week, reduce workers’ hours or change their compensation systems to either embrace the change or seek to avoid the effects of the change.  Employers might reduce wages or set an hourly rate that, when overtime is taken into account, is no higher than what the worker was receiving when classified as salaried and exempt from overtime.

Questions or Assistance:
If you have questions regarding either of these changes, please contact Daniel Schwartz at
dschwartz@goodwin.com or (860) 251-5038, Gary Starr at gstarr@goodwin.com or
(860) 251-5501 or Henry Zaccardi at (860) 251-5737 or hzaccardi@goodwin.com.

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Photo of Daniel Schwartz Daniel Schwartz

Dan represents employers in various employment law matters such as employment discrimination, restrictive covenants, human resources, retaliation and whistle blowing, and wage and hour issues. He has extensive trial and litigation experience in both federal and state courts in a variety of areas…

Dan represents employers in various employment law matters such as employment discrimination, restrictive covenants, human resources, retaliation and whistle blowing, and wage and hour issues. He has extensive trial and litigation experience in both federal and state courts in a variety of areas, including commercial litigation and trade secret enforcement. Dan is the author of the independent Connecticut Employment Law Blog. The blog discusses new and noteworthy events in labor and employment law on a daily basis.

Photo of Gary S. Starr Gary S. Starr

Gary Starr provides practical advice to a wide range of clients in the private and public sector, bringing over 30 years of experience to counseling clients in traditional labor relations matters as well as human relations problems. His experience helps clients avoid the…

Gary Starr provides practical advice to a wide range of clients in the private and public sector, bringing over 30 years of experience to counseling clients in traditional labor relations matters as well as human relations problems. His experience helps clients avoid the “big mistakes” as well as the day-to-day hassles. Gary also defends employers in state and federal courts, regularly appearing before judges, juries, and administrative agencies. He provides strategic and creative approaches to difficult employee issues, seeking practical solutions and aggressively litigating where and when necessary.

Photo of Henry J. Zaccardi Henry J. Zaccardi

Henry Zaccardi represents public and private employers and non-profit organizations in all aspects of labor relations and employment law. This includes personnel policies and practices, Freedom of Information Act issues, wage and hour disputes, drug and alcohol testing, family and medical leave, equal…

Henry Zaccardi represents public and private employers and non-profit organizations in all aspects of labor relations and employment law. This includes personnel policies and practices, Freedom of Information Act issues, wage and hour disputes, drug and alcohol testing, family and medical leave, equal employment opportunity and affirmative action, occupational health and safety and related matters and regulatory compliance.