Despite intense political pressure and efforts to derail the final overtime regulation through Congress and the courts, the U.S. Department of Labor’s (DOL) new overtime regulations went into effect on Monday, August 23, 2004.

The rules redefine the salary and job duties tests of the “white collar” exemptions, which exempt executive, administrative, professional, outside sales, and computer professional employees from the Fair Labor Standard Act’s (FLSA) overtime pay requirements.

The DOL’s Wage and Hour Division has stated that they will “vigorously and promptly” enforce the new regulations despite the possibility that the new requirements may be reversed when Congress returns to session. Additionally, contrary to popular belief, there will be no grace period for employers to comply.

What Does This Mean to Auto Dealerships?

Private employers need to compare the new federal rules with existing state overtime regulations, and in any case where there is a difference between the rules the employer must follow the regulations that provide the greatest protection for employees. 

At a minimum, ALL employers will need to pay their exempt employees at least $455 per week (or $23,660 per year), the new federal salary threshold, to maintain those employees’ exempt status.

Employers should already be in compliance!
Organizations that are not acting in accordance with the new regulations may have to pay serious fines and back wages to employees.  For example, following a recent U.S. Department of Labor investigation, BJ’s Wholesale Club, a Massachusetts-based wholesale club chain, paid $320,000 in back wages to 233 personnel managers who were improperly classified as exempt. (Source: Department of Labor, July 2004)