Overtime Changes? Not So Fast

overtimeA couple of weeks ago, news outlets across the country were sounding the alarm — or singing Hail to the Chief — over what many of them referred to as an “order” or a “new rule” from President Obama about overtime. What actually happened is this: The President wrote a memo. Okay, to be fair, he also gave a speech. But he didn’t issue an order (not even one of his “year of action” executive orders that have been getting so much attention), he didn’t make a rule, and the Department of Labor didn’t make or change any rules either.

What the President did do is send a memo to the Secretary of Labor, directing him to “modernize and streamline” existing overtime regulations. In doing so, the President asks the Secretary to consider how the regulations can be simplified and updated to reflect “the changing nature of the workforce,” consistent with the intent of the Fair Labor Standards Act (FLSA).

Sound somewhat cryptic? There’s a clue to what the President really wants in his speech: He mentions the current salary basis requirement for the white collar exemptions (the legal exceptions that allow employers not to pay administrative, executive, and professional employees overtime, no matter how many hours they work). If these employees earn less than $455 a week, an employer may not treat them as exempt, regardless of their job duties. Instead, they must be paid overtime for all hours worked in excess of 40 per week. It seems the President would like to see this threshold raised, although he hasn’t said by how much. That’s it.

If we are willing to read the tea leaves and bet that the Secretary of Labor will propose raising that $455 a week figure, it won’t happen overnight. Nor will it happen in a month, or two, or several. To make any changes, the Labor Department will have to revise its regulations. This can happen only through the federal government’s official rulemaking process, which has plenty of steps. The Department first announces its plan to consider changes (no word that this has happened on overtime yet), then issues a proposed rule, then must wait at least a month or two for the public to comment on the proposed rule. The agency then has to review the comments, decide whether to make any changes to the rule before it becomes final, and explain its thought process in the final rule. And — spoiler alert! — there are going to be plenty of comments on this particular change.

Maybe the rules will actually change, and maybe they won’t. But we’ll all have plenty of time to discuss it when there’s an actual proposal on the table.