On September 24, 2019, the Department of Labor (DOL) issued its final federal overtime rule, making an estimated 1.3 million American workers eligible for overtime pay under the Fair Labor Standards Act (FLSA). The new rule takes effect January 1, 2020, and will increase the minimum salary threshold for overtime exemption from $23,660 per year to $35,568 per year (or from $455 per week to $684 per week).
What does this affect?
What does not change under the new rule are the white-collar duties tests for executive, administrative and professional employees. In addition to the salary requirement, certain factors must be met for an employee to qualify for exempt status under these federal tests. For example, to qualify for an administrative exemption, the employee must perform non-manual work, manage general business operations and have decision-making authority on significant matters.
How can employers prepare for the new rule?
- Review the job duties tests for exemption status and ensure positions are classified correctly.
- Increase employee salaries to retain the exemption where appropriate and avoid having to calculate and pay overtime.
- Reclassify the position as nonexempt and pay the employee overtime for hours worked in excess of 40 hours in a work week.
- Communicate any classification and salary changes to employees. Timekeeping training may be needed for employees moving from salary to hourly positions.
Take action for your business
Reach out to our Human Capital Management team to learn how we can help you find impactful solutions to track time, calculate overtime and process payroll.