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A couple of points I’d like to make (and yes, I am in HR and am a payroll/HRIS manager).

First of all there are DOL/FLSA rules defining who can be exempt from overtime and they are pretty clear.

It has nothing to do with a job title. For instance you can’t rename a Secretary to “Executive Administrative Assistant” or a Janitor to “Refuse Disposal Engineering Manager” and suddenly not pay them overtime. In order to be properly classified as salaried overtime exempt the position, to name a few of the tests based on the position (not the job title), they must have management as their primary duty, typically although not always, they directly supervise the work of others and have input on personnel issues, hiring, firing, performance reviews and wage increase recommendations, and exercise independent judgment and discretion about matters of significance, i.e. have some authority on decision making of importance to the business.

http://www.flsa.com/coverage.html

Sure, there are some businesses that misclassify workers as being exempt when they aren’t in order not to have to pay overtime, but if they do, they open themselves up to DOL investigations if there is a complaint and face not only back pay for overtime but also substantial fines.

While it is nice to get time and a half for working over 40 hours in a week (or in some states also over 8 hours in a day like in CA) hourly workers do not have to be given paid vacation, PTO, sick time or paid holidays or paid for breaks or lunch periods of 20 minutes or more or if the business closes due to weather, etc. And if they do get paid time off, those hours do not have to count toward overtime although my company does currently count them. But under FLSA an hourly worker does not have to be paid for hours not actually worked nor does paid time off, non-worked hour have to be counted toward overtime.

On the plus side of being in a salaried exempt position, if you work any part of the work week you must be paid your full salary. The employer may legally require you to cover missed work time with PTO, but they can’t dock your pay for full or partial days even if you have exhausted your leave bank as long as you worked any part of the week (although excessive missed time could be a disciplinary and performance issue that might lead to termination). And a salaried exempt person is going to be paid their full salary for the week when the company is closed such as for holidays and weather closures. Salaried exempt workers, at least in most companies have some leeway with respect to minimal lost time, i.e. if I am 15 minutes late for work because of traffic or bad weather or have to leave a half hour early to go to the doctors, where I work, unlike our hourly non-exempt workers, I don’t have to cover it with PTO or am I docked for it, although my the Director of HR that I report to might expect me to make up the time if I need to in order to get the job done, she also knows that I work a good number of hours over 40 so I have some flexibility in my position, including the ability to occasionally work from home.

And if you are properly classified as a salaried exempt employee, because you have some amount of independent judgment, if you need to work late or over a weekend to finish a project, you can without requesting permission to work the “overtime”. As a salaried exempt employee, I can go the extra mile and prove myself to be a responsible and dedicated worker who gets things done and that has lead to many salary increases and promotions over the years.

The previous job I had however I was classified as being a non-exempt hourly position (customer service for a 3rd party benefits administrator) but permission to work overtime was rarely granted but the work load was ridiculous so I most others in my department were overworked and overstressed because we were always trying to catch up but weren’t allowed to work the overtime that IMO was necessary to do a good job.

I would also mention that the $455 minimum salary per week for exempt employees is the minimum but keep in mind that also includes salaried workers who work a part time schedule, do not work anywhere near 40 hours a week. We have a few of those where I work, one is a professional engineer who retired but came back working part time, only 16 hours a week. Because he still holds the same position that is salaried exempt, he has to be paid the $455 minimum even if he only works 1 or 2 hours in any week.

And FWIW there is nothing against current FLSA rules that says a company can’t pay an overtime premium to salaried exempt workers or pay them a bonus, or even pay them an hourly rate over and above their salary for working extra hours, a few companies I know of do this. OTOH, if you pay a bonus to an non-exempt worker and that bonus or commission is “non-discretionary”, i.e. guaranteed and part of a written plan and based on some sort of performance criteria, then that bonus or commission must be spread out over each and every week in which the bonus was earned and any overtime worked and paid over those work weeks must be recalculated to include the bonus in the regular rate of pay and the additional overtime must be paid. So my take is that this will screw a lot of formerly salaried exempt workers right out of many bonus and commission plans.

And those newly classified as non-exempt will have to start either punch a time clock or keeping detailed time records in order to ensure they are paid overtime. While that might not sound like a big deal, in reality that means a lot more work for managers, who now are responsible for substantiation and approving those time records and additional work for payroll departments. Paying salaried workers is typically less time consuming as they are typically set to “Auto Pay” and only exceptions have to be dealt with, than dealing with the complexities of dealing with time records as the employer/payroll department is responsible to ensure that even if the employee misses punching in or out for the day or in or out for lunch they legally must be paid for time worked even if the hourly employee misses filling out their time card properly. At my company my payroll specialist and I already spend a lot of our time chasing down time card and time clock errors and omissions.

My take as a payroll and HR professional with nearly 30 years of experience is that these proposed changes will not mean an increase in pay overall, that companies will reduce their increased potential overtime exposure by several means including but not limited to; limiting wage increases for everyone across the board from middle management on down; eliminating non-exempt positions where they can or hiring more part time workers (with the added bonus of if they work less than 30 hours, not having to offer them health insurance); not counting non-worked hours toward overtime if not required as my company currently does; putting more limits on paid leave time; putting caps on the amount of paid leave time an employee can accrue (and we did this late last year, capping it a 220 hours from the old max of 350 hours regardless of seniority and stopping payouts for unused PTO) and or putting in place a “use it or lose it” cap were allowable by state law; eliminating many company paid holidays; and utilizing more temporary workers through temp agencies to cover periods when overtime might be a possibility.

Thanks Obama!