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Changes in Federal Overtime Exemption Rules Do Not
Affect Most California Employers
By Jessica M. Matulis, Esq. of Neil Dymott
In hopes of stemming the flood of litigation by employees against
their employers for denying them overtime, the new rules in the Fair
Labor Standards Act overhaul the nation’s federal overtime
provisions.
As of August 23, 2004,
employees are now eligible for overtime pay if they earn less than
$23,660/year and work more than 40 hours/week. Under the
previous overtime laws, employees were eligible for overtime if they
earned $8,060/year or less. These changes open the door to
overtime pay to many more employees.
On the other hand, the federal regulations also narrow overtime
eligibility for some white-collar employees by re-defining the
exemptions. Indeed, unless specifically exempted, employees
covered by the Fair Labor Standards Act must receive overtime for
hours worked in excess of 40 in a workweek. For example,
employees who earn a yearly salary of $100,000, engage in "office or
non-manual" work and "customarily and regularly" perform one or more
exempt duties (executive, administrative or professional), are now
exempt from overtime pay under the "highly compensated" test.
Additionally, the Fair Labor Standards Act clarifies the types of
work that qualifies as administrative, professional and executive
for purposes of overtime. Under the new regulations,
eligibility for the administrative, professional and executive
exemptions is based on the type of work the employee performs every
day. If an employee meets the stringent exemption
qualifications, he or she is not entitled to overtime, even if he or
she works more than 40 hours/week. However, despite the
detailed "duties" test set forth by the federal law, the analysis
whether an employee is exempt from overtime can nonetheless be very
complex and complicated.
So what does this mean to
California employers? Fortunately, it doesn’t affect them much
at all. Under federal law, where state overtime law is more
favorable to employees it is the state law that sets the standards.
As California’s state overtime provisions are more restrictive, they
in effect trump the federal regulations. Therefore, there is
no change for employers of private California companies as they are
already subject to the more worker-friendly state overtime
provisions. However, the new federal laws may apply to the
approximately 2.3 million federal, state and local government
workers in California. Furthermore, private employers who
conduct business in states other than California may also be subject
to the new regulations.
If you have any questions about this article or any other
employment law issue, please contact Jessica Matulis at
619.238.2208 or
jmatulis@neildymott.com or Hugh McCabe at 619.238.2257 or
hmccabe@neildymott.com
© 2004 Neil Dymott Perkins Brown & Frank
APC
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