The United States Department of Labor (DOL) recently announced that it finalized new rules regarding overtime under the Fair Labor Standards Act (FLSA). The agency determined that any employee covered by FLSA usually qualifies for overtime pay for all hours above and beyond the 40-hour workweek. It estimates that 1.3 million additional workers will now be eligible.
These changes are the first on overtime since 2004 and are regarded as a standard update tied to the cost of living and the economy.
There are exceptions
Even with this shift, certain exempt employees will still do not qualify for overtime. The DOL has exemptions based on a salary basis test, a salary threshold test or a duties test. The DOL’s recent change only increases the salary threshold. Essential details regarding these exceptions and rules include:
- The limit for highly compensated employees goes from $100,000 per year to $107,432 per year.
- The current salary threshold jumps from $455 per week to $684 per week.
- Employers can count 10% of commissions and other nondiscretionary bonuses paid annually count toward the employees’ salary.
- Salary thresholds apply to employees in U.S. territories or working in the motion picture industry.
New rules effective on Jan. 1, 2020
It is smart for employers to examine how these changes will affect payroll before the end of the year. They can then determine changes in job duties or compensation packages. Employers with questions or looking for solutions can check with an employment law attorney to determine what would work best for the company.