As of January 1, 2020, employees you thought were exempt from overtime may not be. As a new decade dawned, the Department of Labor's (DOL) long-anticipated updated overtime rule (announced in September 2019) went into effect. The new rule, which changes the regulations for the first time in fifteen years, updates the earnings threshold required to exempt executive, administrative, and professional employees from the Fair Labor Standards Act's overtime pay requirements. The rule raises the salary threshold from $455 per week (equivalent to $23,660 per year) to $684 per week (equivalent to $35,568 per year) but allows employers to satisfy up to ten-percent of the salary threshold with non discretionary bonuses and incentive payments.
WHAT DOES THIS MEAN FOR YOU?
The DOL estimates that the new rule will entitle approximately 1.3 million additional workers to overtime pay. In other words, 1.3 million workers who were exempt from overtime pay on December 31, 2019 are no longer exempt. Do any of those employees work for you? Do you currently have employees you consider exempt from overtime that make less than $35,568 per year? If you don't know, find out. Overtime lawsuits are costly and ubiquitous. Not only can an employer be on the hook for any unpaid overtime, but it can also be required to pay liquidated damages (an amount equal to unpaid overtime), and the employee's attorneys fees. An ounce of prevention is worth a pound of cure here. Identify any employees you otherwise consider exempt making less than the threshold salary, and set out a plan to implement new pay practices. Here, employers have a number of legal options, from paying salary plus overtime to paying simply hourly.
It's still early in the year, and it's never too late to implement proper pay practices. If you have questions, call us. We're happy to help.