Do Your Supervisors Make $50,000?

June 30, 2015 at 7:54 am Leave a comment

If not, then they can no longer be classified as exempt employees and must get overtime. According to this morning’s news reports, that’s the core part of proposed regulations updating the Fair Labor Standards Act to be released by the Obama Administration’s Department of Labor later this week.

Under existing regulations, one of the conditions for an employee to be classified as exempt is that he or she makes a little more than $23,000. Critics point out that this threshold requirement is so low that it has allowed employers to contravene the intent of federal law by classifying an employee as the supervisor and expecting them to work 50-60 hour weeks without overtime pay. They argue that a $50,000 threshold simply adjusts the Act to where it would be had it kept pace with inflation.

Opponents of this well-meaning but fatally misguided view correctly point out that a $50,000 threshold won’t increase the salary of many employees, but simply decrease the amount of hours existing employees work and, in a best case scenario, encourage the hiring of more lower-paid employees.

To put this in practical terms, review a list of your exempt employees making less than $50,000 and estimate how many hours they work over 40 each week. Then figure out how much it would cost you to pay each of these employees time and one-half for these hours. This is how much the federal government effectively wants to tax you. Occasionally, it makes me wonder if we live in a capitalist country.

Entry filed under: HR, Regulatory. Tags: , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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