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By Howard Perlman
A group of senators and a research group in late January urged the Labor Department to more than double the weekly salary threshold for exempting employees from overtime protections of the Fair Labor Standards Act, but an increase of that magnitude would not necessarily accord with standards established by the department, a partner of a law firm said Feb. 4.
Proposed regulations regarding an update to the threshold are to be released in February, the department's Fall 2014 regulatory agenda said.
A letter to President Barack Obama that was issued Jan. 30 by 26 Democratic-caucus senators, including Sens. Dick Durbin (D-Ill.), Patty Murray (D-Wa.) and Bernie Sanders (I-Vt.), suggested that the weekly salary threshold should be raised to at least $1,090 to help employees in the middle class. The Economic Policy Institute said Jan. 28 in a news release that the threshold should be raised to about $960 to “improve the well-being of the affected employees without harm to the economy.”
However, the Labor Department's analysis of how much the threshold should be raised, which is to influence the threshold included in the proposed regulations, should focus on how the economy would be affected by an increase instead of focusing on how to help employees, which is a “wholly-illegitimate motivation” because the department does not have the power to set the threshold based on such a consideration, said John E. Thompson, a partner with Fisher & Phillips LLP, in a blog post Feb. 4.
A threshold calculated based on the factors the Labor Department applied for previous threshold calculations likely would be lower than the threshold proposed by the Democratic-caucus senators, Thompson said.
The Labor Department established the weekly salary threshold in 1975 as $155 and in 2004 as $455 because it determined that those thresholds would be sufficiently appropriate to accommodate varying prevailing wage levels across the U.S. and have sufficiently low negative effects on inflation, low-income industries and small businesses, Thompson said. Because of these factors, the department “has deliberately set the threshold near the lower end of prevailing salaries,” and establishing a higher threshold for the primary purpose of helping employees would be inconsistent with the department's previous practices for establishing the weekly salary threshold, he said.
The Democratic-caucus senators who suggested that the threshold should be raised to at least $1,090 think this would be an appropriate level because the percentage of salaried workers protected by the FLSA's overtime provisions significantly decreased since 1975 and their proposed increase would enable about half of salaried workers to be nonexempt from overtime premiums. While about 11 percent of salaried workers earn less than the current weekly threshold of $455, about 65 percent of salaried workers in 1975 earned less than the weekly threshold of $155 established that year, the senators said.
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