Proposed federal regulations released Thursday would bring sweeping changes to the way managers and executives are defined, shifting who is and isnít eligible for overtime pay.
The Labor Department said the changes will 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 the 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 it was likely the new rules would cause more workers to lose overtime pay than gain it.
The past five years have seen an explosion of lawsuits filed by employees 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 multi-million 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.