Hot on the heels of his proposal to raise minimum wage for federal contractors to $10.10, President Obama is planning new overtime laws that will force businesses to pay overtime to more workers. The new regulations will make employees who are wrongly classified as “executive” or “professional” eligible for overtime. The President hopes to stop the misclassification of workers in order to avoid paying them overtime. The Labor Department will seek to revamp its regulations and require overtime pay for millions of fast-food managers, loan officers, computer technicians and many more professions.
It is a common myth that employees classified by their employers as “executives” or “professionals” are automatically exempt from overtime. The real question is whether the employee must have certain powers and spend their time supervising people. Among other powers, an executive must have the ability to hire and fire, and a professional must have advanced knowledge in a field of science or learning. President Obama will seek a stricter enforcement of these rules to ensure that to be classified as exempt the employee must be performing “executive” or “professional” duties 100% of the time. Furthermore, executives currently must make at least $455 a week to be exempt from overtime. President Obama seeks to raise the threshold to $984 a week, according to the New York Times.
So, hiding employees behind a title will be much harder to do. Just because an employee is identified as an “executive” or “professional” does not make them exempt from overtime pay. This is great news for employees who have been unfairly misclassified as executives by businesses to strategically avoid paying them overtime.