Increased Wages for Employees a Near Reality

Following up on a pledge to use his executive authority to make changes, President Barack Obama made a big push to increase the minimum wage for some employees and to encourage employers nationwide to increase wages for their workers.

Last month, President Obama signed an executive order raising the minimum wage for workers on federal contracts to $10.10 an hour. The order will affect workers starting on January 1, 2015, and applies to new contracts and replacements for expiring contracts. Of course, to the extent the work is covered by a wage determination that is higher than $10.10, the higher rate will continue to apply.

And that was just the start. In mid-March, President Obama signed a memorandum directing the Labor Department to devise new overtime rules that would make more workers eligible for time-and-a-half pay for their extra hours of work. While the memorandum does not reference any specific changes, the President's and Labor Secretary's comments strongly hinted that the new regulations will raise the minimum weekly wage for the so-called “white collar” exemption from the current rate of $455 per week.

In addition, the comments left little doubt that the regulations will be revised to “modernize” them to limit the types of employees who will be exempt. A proposed rule from the Labor Department is expected no sooner than this Fall. Once proposed regulations are prepared, the Department will publish a notice of proposed rule making, giving the public between thirty and ninety days to file comments on the proposed changes.

The executive order and the anticipated regulatory changes that will expand the number of employees who are non-exempt will no doubt have significant consequences that could affect employment and the survival of certain businesses. Importantly, companies can help shape the final regulations by participating in the regulatory process.

Please contact your Elarbee Thompson attorney or reply to this email for advice on ways to prepare for these changes.