AB 154

Under current administrative rules promulgated by the Department of

Workforce Development, employers are generally required to pay employees 1.5

times their regular rates of pay for all hours worked in excess of 40 hours per week

(overtime pay). Those rules, however, exempt from the overtime pay requirement

employees whose primary duty consists of administrative, executive, or professional

work (exempt employees). Currently, those rules generally define an administrative,

executive, or professional employee, in part, as an employee who does not devote

more than 20 percent of his or her hours of work to activities that are not

administrative, executive, or professional in nature (20 percent rule) and who is

compensated on a salary basis at a rate of not less than $700 per month or, in the case

of a professional employee, $750 per month (compensation threshold).

This bill requires DWD, for purposes of defining an exempt employee, to set the

compensation threshold at $970 per week and to replace the 20 percent rule with a

requirement that employee's “primary duty" be administrative, executive, or

professional work. The bill provides that, by the first day of the 18th month

beginning after the bill's effective date, and annually thereafter, DWD must

promulgate emergency rules to revise that compensation threshold by calculating

the percentage change in the consumer price index for the 12-month period ending

on the last day of the last month for which that information is available and adjusting

the rate then in effect by that percentage difference.