Everybody is talking about it – President Obama’s announcement at the end of last week that existing overtime regulations be “modernized” and “streamlined” – but what exactly does this mean? The answer is, only time will tell.
In the “Presidential Memorandum” entitled “Updating and Modernizing Overtime Regulations,” the White House states that “regulations regarding exemptions from the Act’s overtime requirement, executive, administrative, and professional employees (often referred to as “white collar” exemptions) have not kept up with our modern economy.” The memorandum, however, fails to identify any specific deficiencies with the current regulations pertaining to these exemptions. Nevertheless, the White House proceeded to issue the following vague directive to the U.S. Department of Labor: “I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.”
Although it is unclear what revisions the DOL will propose, it is crystal clear that the White House views employee exemptions as too broad and that the DOL will be taking steps to limit the application of such exemptions. But the changes being contemplated, if any, will not and cannot happen overnight. Indeed, before any amendments to the regulations can be implemented, the DOL must first propose rule changes and afford an opportunity for public comment.
In the meantime, however, we recommend that employers take proactive steps to audit and review their current classification of exempt employees.