New Overtime Rule: It’s back…
A few years ago, employers scrambled to prepare for a new overtime salary rule. However the rule was stopped in its tracks just before its effective date due to a judge’s injunction.
Now a lesser version of the rule is back:
Effective January 1, 2020 the new minimum salary threshold for an employee to be considered salaried/exempt is $684.00 weekly (or $35,568 annualized).
This is an increase from the current: $455 a week ($23,660 annualized).
Under the previous, and ultimately blocked, rule the salary threshold for a salaried/exempt classification would have nearly doubled.
To be exempt from overtime under the federal Fair Labor Standards Act (FLSA) employees must be paid a salary of at least the threshold amount AND meet certain job duties tests. If they are paid less than the threshold amount or do not meet the job duties tests, they must be paid overtime at 1.5 times their regular hourly rate for hours worked in excess of 40 in a workweek.
Advice for employers to prepare for the new rule:
Run a salary report and review employee classifications: If you have any salaried/exempt employees who earn less than $35,568.00 annually, you need to either increase their salary to the new threshold effective 1/1/2020 or change their status to hourly/non-exempt effective 1/1/2020 and pay overtime accordingly.
Remember that FLSA requires salaried/exempt employees to meet both the salary threshold test AND the job duties test. Information on job duties test can be found here.