The New Overtime Rule

The U.S. Department of Labor issued a final rule today changing the white collar overtime provisions of the Fair Labor Standards Act.  The final rule, which goes into effect on December 16, will:

  • Raise the  salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers; and,
  • The salary threshold will be automatically updated every three years, based on wage growth over time, increasing predictability.

This is a big achievement for the U.S. Department of Labor, which has had a decidedly mixed record under the Obama administration, and will benefit millions of low-paid workers – many of whom are women.

For now, white collar workers who earn more than $47,476 per year can still be subjected to merciless exploitation by their  corporate overlords.

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Urban Outfitters “Asks” Salaried Workers to Volunteer

Can an employer ask a worker to “volunteer” to work on weekends?

This concept is being tested by the affluent retailer Urban Outfitters, Inc., which asked salaried employees at the company’s Philadelphia corporate headquarters to “volunteer” to work six-hour shifts on weekends throughout October at the  company’s new fulfillment center about 50 miles outside Philadelphia.  Urban Outfitters operates under the Anthropologie, Bhldn, Free People, Terrain and Urban Outfitters brands.  Somewhat ironically,  the company announced in August that its total  net sales had increased in the second quarter by 7% over the prior year to a record $867 million.

A memo leaked  to Gawker  states that “volunteers” will “work side by side with your [fulfillment center] colleagues to help pick, pack and ship orders for our wholesale and direct customers.” The memo continues: “In addition to servicing the needs of our customers, it’s a great way to experience our fulfillment operations first hand. Get your co-workers together for a team building activity!”

Salaried workers are exempt from the protection of the Fair Labor Standards Act of 1938, which established the 40-hour work week and regulates the payment of wages and overtime.  They can be forced to work uncompensated overtime. But it’s a different thing to ask workers – even salaried workers –  to volunteer. The FLSA prohibits for-profit employers from permitting any individual to “suffer or permit to” work without compensation. The definition of “volunteer” is to work without compensation. So it stands to reason that for-profit employers cannot ask any employee to “volunteer” to work.

The situation demonstrates the problems facing workers who are exempt from the FLSA – especially poorly paid white-collar workers.

Urban Outfitters’ CEO; Richard Hayne’s net worth is approximately $1.35 billion (according to the Forbes billionaires list) but many white-collar workers are not so lucky. They are  barely paid enough to put food on the table.  The FLSA’s “white collar” exemption applies to employees whose job duties primarily involve executive, administrative, or professional duties and who earn a salary of at least $455 per week or $23,660 a year. This poverty-level paycheck is particularly brutal for single parents (mainly women) who must schedule and pay for child care. And, let’s face it, an employer’s request for volunteers is inherently coercive. Only a courageous worker can pass up an opportunity to experience the fulfillment center “first hand” in a “team building activity”?

Last summer, the U.S. Department of Labor (DOL) announced a proposed rule to amend the FLSA “white-collar” exemption to eventually eliminate the exempt status of an estimated 21.4 million“white -collar”employees. The DOL’s proposed regulations dramatically increase the minimum salary threshold for exempt status workers to $970 per week or $50,440 per year. This represents the 40th percentile of earnings for all full-time salaried workers throughout the United States.

But for now, it appears that salaried workers at Urban Outfitters who don’t want to risk their jobs by refusing to “volunteer”  will be spending their weekends packing overpriced clothing into cardboard boxes.

It should be noted the FLSA does permit individuals to volunteer in the non-profit sector for religious, charitable, civic or humanitarian  organizations and to perform volunteer services for a state or local government agencies. Indeed, the U.S.Department of Justice  has the gall to retain licensed attorney volunteers for up to a year at a time to work as unpaid prosecutors along-side Assistant U.S. Attorneys who earn a starting salary of more than $75,000. Instead of leading the nation, it seems the federal government, including the Office of Personnel Management,  is intent upon perpetuating  hiring practices that are sadly antiquated and even discriminatory .

The DOL Addresses ‘White Collar’ Slavery

*The Dept. of Labor issued the final rule on May 19, 2016. The DOL  more than doubled the salary threshold for eligibility for overtime for full-time salaried workers — lifting it from $23,660 to $47,476 per year. That means some 35 percent of full-time salaried workers, based on their pay, will now be eligible for overtime. PGB

The Fair Labor Standards Act, 29 CFR Part 541, makes it possible for employers to impose a kind of slavery on poorly-paid salaried employees who are exempt from the protections of the act because they are classified as “white collar” workers.

However, the U.S. Department of Labor this week released proposed amendments to the FLSA  “white collar” exemption provision that would, if adopted, eventually eliminate the exempt status of an estimated  21.4  million so-called “white collar” employees.

The FLSA exemption now applies to employees whose job duties primarily involve executive, administrative, or professional duties and who  earn a salary of at least $455 per week or $23,660 a year.  The DOL’s proposed regulations dramatically increase the minimum salary threshold for exempt status workers to $970 per week or $50,440 per year. This represents the 40th percentile of earnings for all full-time salaried workers throughout the United States.

Low-level white collar workers are ripe for exploitation, especially during difficult economic times when jobs are scarce.  During the Great Recession, many employers forced poorly-paid white collar workers to work endless or erratic unpaid overtime hours  to compensate for lay-offs or short staffing.  This caused predictable stress and burnout, with all of the attendant problems for individuals and families.  The “white collar” exemption is particularly brutal for single parents (mostly women) who must schedule and pay for child care.

The DOL has not updated the “white collar” salary level since 2004.  To prevent the proposed new salary level from becoming outdated, the DOL’s proposes  automatically updating the salary level each year to reflect the applicable 40th  percentile of earnings.  [Read more…]

Fair Pay for White-Collar Workers

Secretary of Labor Thomas Perez has submitted a proposed rule addressing employer abuse of the white-collar overtime exemption in the Fair Labor Standards Act (FLSA) to the Office of Management and Budget (OMB) for review.

The FSLA was passed in 1938 and established the 40-hour workweek. The white-collar exemption allows employers to deny overtime compensation to executive, administrative, professional, and outside sales employees.

President Obama issued a directive last March ordering Perez to proposed a revision of the FLSA  “white-collar exemption” to address employer abuse and to increase to the rule’s salary basis test which has not been changed since 2004.

The details of Perez’ proposal have not been disclosed. He is expected to recommend increasing the number of people entitled to overtime wages by making it more difficult to qualify for the white-collar exemption.

[Read more…]