Announcement of Issuance of the Final Part 541 Regulations
Given by Secretary Elaine Chao on April 20, 2004 at the Defining the Fair Labor Standards Act "White Collar" Exemptions
There is nothing more basic or important to workers than their pay.
And today, workers win —because the Labor Department is issuing new rules that guarantee and strengthen overtime rights for more American workers than ever before.
These new rules modernize and clarify overtime regulations that were first created in 1938. As the world of work changed, these regulations largely remained frozen in time. They described jobs that no longer exist and used tests that no longer made sense. They were difficult—and sometimes nearly impossible—to interpret and enforce.
This confusion has created a legal nightmare. More and more white-collar workers are forced to go to court to find out if they are eligible for overtime. In fact, overtime complaints now generate more federal class action lawsuits in the workplace than discrimination complaints. And workers who file suit must wait two years for a legal decision.
There has to be a better way for workers to get the overtime they deserve. That is why the Department has developed these new overtime rules.
The final rules expand the number of workers eligible for overtime by nearly tripling the salary threshold. Under the old regulations, only workers making less than $8,060 were guaranteed overtime. Now, workers earning up to $23,660 are guaranteed overtime—regardless of their job title or responsibilities.
This change alone will ensure that 1.3 million workers who did not have the right to overtime will gain that right under the new rules. An additional 5.4 million workers, whose overtime rights were ambiguous, can now be certain they are entitled to overtime. They won’t have to hire a lawyer or go to court.
But that’s only part of the story. In fact, these rules clarify overtime rights for workers in all income categories. The rules clearly spell out the duties a worker must perform before an employer can claim that he or she is not entitled to overtime.
This will protect workers from unscrupulous employers who try to get around the rules by conferring executive titles on lower-level workers.
As you can imagine, this has been a massive undertaking. The new rules we are announcing today took several years to complete. We listened carefully to nearly 80,000 comments submitted by the public. The Department made significant revisions and improvements based on that input—because we know how important overtime pay is to millions of working families.
In the course of developing these new rules, a lot of misinformation has been spread about their impact. They have been unfairly attacked for taking away overtime pay from millions of Americans, when the exact opposite is true.
That’s why we took the extra step of spelling out who is NOT affected by the new rules. Thanks to the constructive engagement of the Fraternal Order of Police in the rulemaking process, the right to overtime for police is clearly protected and strengthened. The overtime rights of firefighters, paramedics, emergency medical technicians and public safety employees are also fully protected.
The new rules protect the overtime rights of licensed practical nurses and veterans. And blue-collar workers, such as construction workers and factory workers, union members, technicians, cooks, and others who receive overtime will continue to receive overtime.
Under these rules, workers will clearly know their rights and employers will know their responsibilities. And this Administration—which has set new records for aggressive Wage and Hour enforcement—will have strong new standards in place to better protect workers’ pay.
The Department has created a special website explaining the new rules, which can be found at www.dol.gov/fairpay . It also tells workers how to file a complaint with the Department of Labor if they believe they are improperly being denied overtime.
These new overtime security rules are a great step forward for America’s workers. I am proud of the Department’s team that worked more than two years to complete these long overdue reforms.
Now, I would like to ask Tammy McCutcheon, the Administrator of the Wage and Hour Division, to brief you on some of the details.