NEW OVERTIME RULE – Effective January 1, 2020
The Fair Labor Standards Act (FLSA) provides basic workplace protections to most workers. The federal labor law requires the federal minimum wage for every hour worked. It also requires overtime at one and one-half times the regular rate of pay for hours worked over 40 in the workweek. While the FLSA applies to most employees, it does allow employers to claim exemptions from its requirements for certain employees whose jobs meet specific criteria.
The FLSA provides exemptions from both the minimum wage and overtime requirements for individuals employed as bona fide executive, administrative, professional, outside sales employees and employees in computer-related occupations. In order to qualify for one of the exemptions, certain tests must be satisfied. Generally, the employee must be paid on a salary basis and must be paid at a certain salary level. In addition, certain tests must be met regarding the employee’s job duties. See paragraph below regarding duties test.
On September 24, 2019, the U.S. Department of Labor announced a final rule which will be effective January 1, 2020. In the final rule, the Department 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.Under the new rule, there are no automatic updates; however, the Department intends to propose updates to the salary level on a regular basis. In the 2019 rule, the Department formally rescinds the 2016 final rule.Additional information can be found on the DOL website at https://www.dol.gov/whd/overtime2019/We would be happy to assist you or respond to any questions that you may have. Please feel free to contact us.
There were no changes made to the duties tests. For more information regarding the duties tests, please follow the link to DOL’s fact sheet #17A at https://www.dol.gov/whd/overtime/fs17a_overview.pdf. The Department of Labor’s Small Entity Compliance Guide at https://www.dol.gov/whd/overtime2019/overtime_complianceguide.pdf provides additional details relating to the duties tests for each exemption type.
Under the new rule, there are no automatic updates; however, the Department intends to propose updates to the salary level on a regular basis. In the 2019 rule, the Department formally rescinds the 2016 final rule.
Additional information can be found on the DOL website at https://www.dol.gov/whd/overtime2019/
We would be happy to assist you or respond to any questions that you may have. Please feel free to contact us.