Proposed federal regulations released Thursday would bring sweeping changes to the way managers and executives are defined, shifting who is and isn’t eligible for overtime pay.
The Labor Department said the changes -- which are unlikely to affect California workers -- would guarantee overtime pay to an additional 1.3 million low-wage employees while potentially moving about 640,000 other workers into managerial status.
Employer groups said an overhaul was drastically needed for rules that have changed little in 50 years. The Society for Human Resource Management said the old rules were confusing even to professionals.
But labor advocates decried the proposal as a massive giveaway to employers. AFL-CIO public policy director Christine Owens said most of the 1.3 million workers mentioned by the Labor Department already qualify for overtime pay. She said the new rules probably would cause more workers to lose overtime pay than gain it.
California already has some of the most protective overtime laws in the nation, and the changes are not expected to have a direct effect here. For example, under the new federal rules, all workers earning less than $22,000 a year would automatically qualify for overtime pay. The California regulations already set the ceiling higher, at $24,000.
Even so, attorney Scott Witlin of Los Angeles law firm Proskauer Rose said the changes could “put greater pressure on California to move their standards closer to the federal government.” If it doesn’t, he said, the state “will risk losing jobs to other states” operating under the less-stringent federal rules.
But Dean Fryer, a spokesman for the California Department of Industrial Relations, said any adjustments would be unlikely.
“We pretty much have drawn the line on who is a manager and who is not,” he said.
The last five years have seen an explosion of lawsuits by those who claim they were misclassified as managers and unfairly denied overtime pay. The majority have been filed in California, including several that have resulted in multimillion-dollar settlements.
The rule changes can be adopted by the Labor Department after a public comment period and are expected to take effect in about a year.
Federal Wage and Hour Administrator Tammy D. McCutchen said the new rules should reduce the number of lawsuits filed nationally because the language is clearer.
Along with raising the salary ceiling for hourly workers, the rules would remove the requirement of a college degree for exempt employees.