DOL Releases Final Overtime Rule Effective January 1, 2020

What just happened?

On September 24, 2019, the U.S. Department of Labor (DOL) announced a final rule to update and revise Fair Labor Standards Act (FLSA) white collar exemptions by raising the salary level for an exemption from $455 per week ($23,660 annually) to $684 per week ($35,568 annually).

This includes the ability to include non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of that threshold.

Annual earnings for highly compensated employees must increase from $100,000 to $107,432 to maintain that exempt status.

These changes, among others, are effective January 1, 2020

What does it mean to my company?

You want to determine impacts.

You can begin to determine which employees are classified as exempt and earn $35,568 per year or less.

Employees are generally classified as exempt or non-exempt from the requirements of overtime and minimum wage. Those employees who are not exempt from the requirement to pay overtime must be paid at a rate of at least 1.5 times their regular rate of pay for any work performed in excess of 40 hours in one work week.

Take a look at your organization’s job descriptions to ensure that they are accurate for the work that the employees actually perform. Update as needed. Review the classifications as exempt or nonexempt based on the “job duties test” as defined by the DOL.

While employers must pay overtime per federal and state laws even if the overtime is not authorized, employers can limit the amount of overtime allowed and provide disciplinary action to employees who fail to follow policy.  Review your policies to assure expectations are clear and in alignment with your organization’s expectations

What can I do to be ready for the deadline?

After you’ve taken the actions above, be sure to communicate expectations in writing so there is clarity regarding any changes and to reinforce factors that remain the same.   

Be ready for but hold off on any actual changes until the proposal becomes effective on January 1, 2020.

HRPro can help you navigate through these changes with our HRPro Consulting Services! 

Contact Joan Morehead via email at joan.morehead@hrpro.com or by phone at 248-543-2644