He doesn't expressly say how:
I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.
The memorandum is here.
So, what will this mean to employers? The White House's "Fact Sheet" about the memorandum, which is longer and more detailed than the memo itself, provides some clues:
Workers who are paid hourly wages or who earn below a certain salary are generally protected by overtime regulations, while those above the threshold who perform executive, professional or administrative duties are not. That threshold has failed to keep up with inflation, only being updated twice in the last 40 years and leaving millions of low-paid, salaried workers without these basic protections. Specifically:
In 1975 the Department of Labor set the threshold below which white collar workers were entitled to overtime pay at $250 per week.
In 2004 that threshold was set at $455 per week (the equivalent of $561 in today's dollars).
This is below today’s poverty line for a worker supporting a family of four, and well below 1975 levels in inflation adjusted terms.
Today, only 12 percent of salaried workers fall below the threshold that would guarantee them overtime and minimum wage protections (compared with 18 percent in 2004 and 65 percent in 1975). Many of the remaining 88 percent of salaried workers are ineligible for these protections because they fall within the white collar exemptions. Many recognize that these regulations are outdated, which is why states like New York and California have set higher salary thresholds.
If you haven't heard, the administration is pushing hard to raise the minimum wage to $10.10 per hour, which is equivalent to a full time salary of $21,008 or so. (They have not invented a pajama boy for the minimum wage - yet- but they're still pretty committed.) Under the current regulations, the salary basis minimum is just over $23,000. So, raising the salary basis threshold is another way of raising the "minimum wage," at least for those workers who qualify as "exempt" under federal law.
As for the duties tests, the DOL revised them in 2004, which addressed some outdated regulations and terms. The DOL also simplified certain exempt tests, particularly when workers earned more tha $100,000 per year. So "simplification" must mean "tougher exemptions." For example, the executive exemption might be changed to require supervision of more than the current two employees. The administrative exemption could be reserved to senior administrative employees with greater discretion. The professional exemption might be revised to include the salary test (hi, contract lawyers). The duties test could be turned into a quantitative measure of time spent on exempt work (a la California) rather than a qualitative test. Etc.
So, by now, some of you may be concerned that these regulations are going to happen and soon. The press and seminar sellers write articles etc. as though this is just around the corner. I don't think any changes are nigh, or imminent, even.
First, it will take years to draft, vet, re-draft, re-vet, and finally promulgate these regulations. Because that's how the DOL issues regulations. Second, although it is true that this administration has issued gobs of regulations, it also has failed to issue others (Hi, NLRB poster, NLRB quickie election rules, etc.). Third, I hear there's an election in 2016. The outcome could affect whether and to what extent any proposed changes are implemented. Even the 2014 election could shift the winds. Who knows?
Finally, as the White House memo points out, California employers already must apply exemptions that are much stricter than federal law. So, don't expect much impact on California employers' practices unless the DOL regulations are incredibly onerous.
Feel better? Go look at pajama boy again.
