January is fast approaching and the start of the new year also brings new overtime rules. This marks the first update to overtime regulations in 15 years! On September 24th, 2019 the Department of Labor (DOL) released a final rule amending the Fair Labor Standards Act (FLSA) beginning in January.
The impact of this final rule will be huge, impacting approximately 1.3 million Americans who were not previously eligible for overtime pay. The DOL is estimating an approximate $298.8 million dollars in overtime pay as a result of this new rule! Here’s what you need to know.
The final rule released by the DOL amending the FLSA is an update to the current enforced thresholds for overtime which were set in 2004. With inflation and increased minimum wages over the last 15 years, this update was overdue and accounts for growth in employee earnings as well as allows employers to account for certain bonuses and commissions towards meeting the salary level. The final rule will impact executive, administrative and/or professional employees (EAP), exempting them from the FLSA’s minimum wage and overtime regulations.
Here are the specific changes the final rule will bring about.
“In the final rule, the Department (of Labor) is:
- Raising the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
- Raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
- Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
- Revising the special salary levels for workers in U.S. territories and the motion picture industry.”
(*Excerpt taken from: https://www.dol.gov/whd/overtime2019/)
Determining Factors for Employees That Fall Within the Exemption
In addition to working in an executive, administrative and/or professional position, there are several other requirements that must be met for an employee to be eligible for the exemption. The employee must be a salaried employee. This means that their pay should not fluctuate based on the quantity or quality of work they produce. Their pay should be predetermined, and their salary fixed. Further, their salary level should reach a minimum of $684 per week ($35,568 annually).
Another important fact to bear in mind is that while the FLSA provides a list of standards for minimum wage and hours, this does not prevent states from its own standards pertaining to minimum wages, hours and overtime. While some states have higher standards than those set forth in the FLSA, other states have less stringent overtime regulations or laws.
If you have questions about the the new overtime rules or any other compliance questions, please reach out to HR for Health and SCHEDULE A CALL, or call: 877.779.4747, or email: email@example.com today!
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Quick note: This is not to be taken as legal or HR advice. Since employment laws change over time and can vary by location and industry, consult a lawyer or HR expert for specific guidance. Learn about HR for Health's HR services