About 1.2 million more workers will be entitled to receive overtime pay for working more than 40 hours per week beginning January 1, 2020, according to the U.S. Department of Labor. The Department changed the overtime rules in the Fair Labor Standards Act (FLSA).
You may already know that “exempt” employees are typically salaried, executive, administrative, and computer professional people who can be required to work more than 40 hours a week without extra pay. Unless you meet the requirements to be an “exempt” employee, you are a “non-exempt” employee who must be paid overtime (time and a half) for working more than 40 hours in a week.
Salary amount is one way to determine whether an employee is exempt. The new rules update the threshold for exempt salary for the first time since 2004 because wages have risen during that time. The new rule increases the threshold for exempt employees from $23,660/year ($455/week) to $35,568/year ($684/week). If you make less than this new threshold of $684/week, even if your job title or duties involve management, administrative, or professional skills, you must be paid time-and-a-half for overtime work. This will be particularly helpful to many managers at restaurants, convenience stores, etc. where duties are managerial, but the pay is modest and the hours can be very long.
The duties test in the FLSA remains unchanged. That means that even above the $684/week threshold, an employee is still eligible for overtime pay if their primary duties aren’t managerial, administrative, professional, or executive. If you earn more than $684/week but your primary duties are manual labor, production, etc., you are still entitled to overtime pay.
The new rules also allow employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level. This change is in recognition of evolving pay practices.
Let’s correct a few common misconceptions about the FLSA. Overtime pay only applies when an employee works more than 40 hours in one week. The FLSA doesn’t require paying an employee more when working Saturdays, Sundays, holidays, or late shifts, if the employee doesn’t exceed 40 hours in that week. The FLSA doesn’t require meal or rest breaks, except for young teenage workers. The FLSA only allows “comp time” (taking off later the same amount of time as you worked extra) by government employers. Private employers cannot avoid paying overtime by giving an employee “comp time” unless the “comp time” is taken in the same week as the extra hours worked. Private employers who violate this rule are subject to penalties by the Department of Labor.
For more information on the new rules, call the U.S. Department of Labor at 1-866-4-US-WAGE or look online at www.dol.gov/agencies/whd/overtime.
Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough. She can be reached at (919) 732-7300 or firstname.lastname@example.org.