May 13, 2016

New Labor Department Rule Hits Startups And Telecommuting

Liya Palagashvili

Senior Research Fellow

Jared Meyer

Although it is almost 80 years old, the Fair Labor Standards Act remains central to the American labor market. One of its mandates requires employers to pay certain classes of employees time-and-a-half for every hour worked beyond 40 in a week. While numerous exceptions from the overtime mandate exist, the Department of Labor recently proposed to drastically alter the “executive, administrative, or professional” (EAP) exemption. Under the current rules, salaried employees must earn at least $455 a week to qualify for the EAP exemption. In the name of ensuring workers are not “overworked” and “underpaid,” the DOL’s proposal more than doubles the earnings threshold to $970 a week.

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