Exempt from Sympathy

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By Ryan Glushkoff, Senior Director, Marketing

Earlier in my career when I was responsible for managing a call center team, HR educated me on the difference between exempt workers and non-exempt workers. They explained that the determination can be made based on how you earn (i.e. the salary test), what you do (i.e. the duty test) or even what your job title is. While it all made sense, the way I remembered the difference was that exempt employees are exempt from sympathy. Your boss can work you as hard as they want and you don’t get paid anymore.

I was reminded of that story when I read that The Department of Labor (DOL) announced a proposed rule that would extend overtime protections to nearly 5 million white-collar workers within the first year of its implementation. Today, approximately 6 million people get overtime. With the new law, 11 million people will likely get it. Here is what The Department of Labor submitted to the Office of Management and Budget for review:

Currently, employees are exempt from overtime and minimum wage pay if paid more than $455 per week. They are proposing that this change to when an employee is paid more than the 40th percentile of earnings rate for full-time salaried workers (projected to be $970 per week in 2016, which equates to a $50,440 annual salary).

Currently, a salaried employee is exempt from overtime and minimum wage pay if paid more than $100,000 per year. They are proposing that a salaried employee is exempt from overtime and minimum wage pay if paid more than the 90th percentile rate of full-time salaried workers (which equate to $122,148 per year).

And finally, currently, threshold salary amounts are fixed. They are proposing that threshold salary amounts be adjusted annually using the Consumer Price Index-Urban (CPI-U) indexing system as a guide.

It looks like employees will be getting a little more sympathy and employers a little less. What’s clear is that if this goes through, workers will have more money in their pocket and employers will have less. But it’s too early to tell whether more disposable income across many will spur spending or whether rising higher wages will hurt entrepreneurship among the few and grind economic growth to a halt.

You can read more about this proposal here and here on the DOL website.

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