While many businesses and small government agencies are concerned about the increased cost and wage expense that is anticipated from the new overtime rules, the US territories have been in a complete panic over the proposed changes.
When the Department of Labor (DOL) proposed changes to the Fair Labor Standards Act (FLSA) earlier this year, they didn’t come out with specific guidelines for US territories. There was discussions regarding what threshold to impose on American Samoa and Puerto Rico, but no definite decisions. This caused alarm for many businesses. Both American Samoa and Puerto Rico have much lower minimum wage threshold than the United States and have very different economies than the mainland. A US dollar goes much farther because the cost of goods is significantly reduced. This means that in the profit of goods in dollars is less for those goods and services.
Initially the DOL came out with the proposed guidelines for American Samoa with indications that it could apply to Puerto Rico. The Salary level for American Samoa was set at $39,884 or $767 per week. That is over double what the current salary threshold is for exempt or white collar workers in American Samoa. Currently exempt, white collar employees make $380 a week so the $400 a week increase will definitely be felt. Employees that make under the new $767 a week or $39,887 annually, will not become eligible for overtime under the new rules.