For the first time in over a decade, the U.S. Department of Labor is updating regulations for overtime pay, effective January 1, 2020. The final rule revises the earnings threshold set in 2004 under the Fair Labor and Standards Act (FLSA). An increase in salary for ordinary Americans is generally a signal of economic growth, and the Department of Labor is responding by amending the current rule. Under federal law, employees considered eligible for overtime must meet the job-specific exemption requirements. It means that certain types of employees (like executives, administrators, and outside sales employees) are exempt from the overtime rule. Now that the rule is revised, these standards may change. Employees making $35,568 will become eligible for overtime pay. Employees with higher salaries (Highly Compensated Employees, or HCE) will receive an annual salary threshold increase from $100,000 to $107,000.
The rule change will also give employers the ability to grant bonuses and incentive payments to salaried workers that can satisfy up to 10 percent of the standard salary level. The rule revises salary levels for “special employees” (workers in U.S. territories and workers in the motion picture industry).
Since the rule’s application date is just over the horizon, employers must prepare for new salary increases. Higher salary employees (HCE) may lose exemption due to the further salary threshold increase. Employers must also be aware that this law only establishes federal standards. It does not override higher thresholds that state laws have already implemented.
Fernee Kelly Law is fully equipped to help any employee or employer understand their rights and responsibilities regarding the new overtime rule.
