Trump Labor Department Issues New (Good) Wage Rule

Background: If an employer classifies an employee as an “executive,” “administrative,” or “professional” they are not owed overtime pay for work in excess of 40 hours. 

Many companies abuse these categories. 

For example: Fast food companies classify store- and even shift- managers as “executive” or “administrative” workers. These people work 40-80 hours a week without any overtime. Nurses are another category that employers frequently misclassify.

Apart from a job duties test, federal law provides a “wage test.” 
The idea is that no one would pay an executive, administrative or professional employee below a certain amount.

For more than a decade, the wage test languished at about $23,000 per year. So, many employers put a fancy label on workers and paid a “salary” of $23,001—voila, no overtime.

The Obama administration was wise to this game. They raised the “wage test” floor from about $23,000 to $47,000. Pause: That meant if a company paid a secretary, or nurse, of shift supervisor, or fill-in-the-blank occupation under $47,000 per year and worked that person more than 40 hours a week, the company owed overtime.

In my opinion, that jump was drastic—and regardless of my view, it caused a real backlash.

I thought the Department of Labor would revise the rule down to the Bush-era level.

I was wrong. The new wage test level is $35,308 per year.

To boil this down in simple terms: If an employer is paying more than $17.65 per hour, there is a legal presumption that if the employee does executive, administrative, or professional work, they are not owed overtime.

As far as rules go, that seems to be in the ballpark of reasonable.