Full access to Entrepreneur for $5
Subscribe

Clocking In

For low-wage workers, overtime may get more lucrative.

By
This story appears in the July 2003 issue of Entrepreneur. Subscribe »

In a balancing act worthy of a high-wire performer, the Labor Department has proposed changes to the law that dictates who gets overtime pay. The changes to the "white-collar exemptions" of the Fair Labor Standards Act would entitle more hourly employees to time and a half and clarify provisions that have allowed salaried workers to sue employers for overtime.

There are two different sets of problems with the current exemptions. First, the wage thresholds, last adjusted in 1975, are so low that even minimum-wage employees working 40-hour weeks qualify as "white-collar" workers who don't have to be paid overtime. The department's proposed modifications would raise the salary threshold from $155 a week to $425 a week. The impact would be to increase the wages of 1.3 million lower-income workers and reduce the number of low-wage salaried workers currently being denied overtime pay. While employers would have to pay some workers more, they would be insulated against lawsuits for violations of the complex "salary basis" test and so-called "no docking" rule. This test in effect limits employers' ability to "dock" exempt employees' pay for partial-day personal absences and disciplinary violations.

Continue reading this article -- and everything on Entrepreneur!

Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5!