Are You Compliant with the New Overtime Law Effective January 1, 2020?
/The Department of Labor recently announced a final rule to make 1.3 million American workers newly eligible for overtime pay under the Fair Labor Standards Act (“FLSA”). This significant change applies to all employers subject to the FLSA. Those changes will go into effect January 1, 2020. Under the new rule:
employees who make less than $35,568 are now eligible for overtime pay. This raised the threshold from $23,660 to $35,568 annually.
the threshold for the highly compensated employees exemption from overtime was raised from $100,000 to $107,432.
nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis may be used to satisfy up to 10 percent of the standard salary level.
The rule does not make any changes to the duties tests.
Action Items for Employers:
Employers should immediately pull compensation data for exempt workers earning below $107,432.
Review budgets, consider what positions you might restructure, flag whom you might reclassify to nonexempt or give a salary increase, and formalize a roll out plan to meet the January 1, 2020 deadline.
Weigh the cost of raising employee salaries above the new threshold against the cost of reclassifying employees as nonexempt and paying overtime.
Review all other employees’ job duties using the duties tests to ensure they are appropriately classified as exempt or non-exempt.
Develop a communication strategy to make sure that reclassified employees know they are not being demoted.
Meeting the salary threshold is just one requirement for classifying workers as exempt. Employers should also take the time to review employees’ job duties to ensure that they satisfy the applicable criteria. These individual workforce determinations should be made with your employment attorney and HR professionals to ensure compliance with the new rule.