Mr. President, You want to fix overtime? Good, but please fix it all!

We are going to take a break in our regularly scheduled program to talk about President Obama’s announcement yesterday regarding overtime.  In a Memorandum to the Secretary of Labor issued yesterday, the President directed the Secretary to update regulations regarding who qualifies for overtime protection.

In so doing, the Secretary shall consider how the regulations could be revised to:

•     Update existing protections in keeping with the intention of the Fair Labor Standards Act.

•     Address the changing nature of the American workplace.

•     Simplify the overtime rules to make them easier for both workers and businesses to understand and apply.

See the Fact Sheet at http://www.whitehouse.gov/the-press-office/2014/03/13/fact-sheet-opportunity-all-rewarding-hard-work-strengthening-overtime-pr.

Now that seems like a really good idea to me.  But let’s do a little experiment here and see if the DOL or even the White House reads my blog. If I get a call, well . . . .

Mr. President, please don’t just go halfway.  Mr. Secretary, seems like the President asked you to simplify the rules for both “workers and business to understand and apply” them.  Please, let’s not forget business here.

What am I talking about?  Let me tell you.  All of the press I have seen on this, and even the White House Fact Sheet that I cite above, has focused on one side of what the President seems to think is the problem.  Over and over we have heard that this effort is aimed at the fast food manager who supervises a crew and who works 60 hours a week and who makes $23,660 per year.  Where do I get that number?  That is the annual salary you need to make under the current regulations to be considered exempt.  It’s called the salary basis test and you can find it at 29 CFR § 541.600, and it is $455 per week.  The White House, in its Fact Sheet, is squarely focused on these people:

For example, a convenience store manager or a fast food shift supervisor or an office worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receive a dime of overtime pay. It’s even possible for employers to pay workers less than the minimum wage per hour.

And you know what?  I’m not going to argue that this system does not need to be fixed for these people.  It does.  It makes complete sense to me that an employee who is called a manager (or even a supervisor) should not work full time and still be below the poverty line for a family of 4.  I agree, that is not right.

But that is only half the equation.  We have an equal number of people, maybe even more, who want to be exempt but can’t be.  They work in an office, they don’t supervise anyone, they don’t fall into the definition of “professionals” under the white collar exemptions and they can’t be considered exempt.  Let’s use IT Help Desk people as an example.  There are plenty of others, like paralegals, or mortgage loan originators.  All these people make way more than $455 per week, so why can’t they be considered exempt?  Because they don’t, according to the Department of Labor, meet the “duties test.”  And they don’t make the $100k per year to be considered “highly compensated.”  See, that is the other side of the coin.  If our fast food manager is put upon because of his salary and is being abused by the number of hours he is required to work, these folks are equally being abused by a system that does not allow them to be considered exempt employees which is exactly what they want to be and exactly what companies want them to be.  They want the certainty of being paid a salary.  When they miss a day of work, they want to get paid.  They are not being abused by being made to work 60 hours a week.  Frankly, they want the prestige of being considered “salaried.”  (And before you tell me that an employer can still pay these folks a salary if he wants, he just has to pay overtime, I know that.  I know all about salaried non-exempt employees.  It doesn’t work.)  Don’t believe me, Mr. President?  Send somebody out to ask them.  I’ll bet 95% of these people want to be what they call salaried and what we call exempt.  So why can’t they?  Now this is not the first time I have written about this.  You can see it here.  Seems I’m ahead of my time.

So Mr. President, Mr. Secretary, I applaud your passion for fixing this antiquated law, but are we just going to go halfway?  Or are we really going to try to fix this outdated set of rules that does not work in today’s workforce?  And are we going to try to do it in a way that is fair for and advantageous for everyone: including businesses that don’t abuse their employees? They need your help too.  Or is it just going to be fast food supervisors?

Oh, and by the way, do you want some help?  If you do, please give me a call, I have some ideas.