Late in 2019, the U.S. Department of Labor issued two final
rules updating and revising the regulations under the Fair Labor Standards Act
(FLSA) governing overtime and regular rate regulations. These rules became effective in January 2020
and will be covered below and in the next issued Facts Alert.
The first final rule was effective January 1, 2020. This rule updated both the minimum weekly
standard salary level and the total annual compensation requirement for “highly
compensated employees.” This is the
first adjustment to the thresholds since 2004, and it is estimated that this
will result in 1.3 million employees currently classified as exempt being
classified as nonexempt and thus will be entitled to overtime pay. Under the new rule, salary and compensation
levels needed for workers to be exempt are as follows:
· Raised the “standard
salary level” from $455 to $684 per week (equivalent to $35,568 per year for a
full-year worker);
· Raised the total annual
compensation level for “highly compensated employees (HCEs)” from $100,000 to
$107,432 per year;
· Allows employers to use
nondiscretionary bonuses and incentive payments (including commissions) that
are paid at least annually to satisfy up to 10% of the standard salary level;
and
· Revised the special
salary levels for workers in U.S. territories and in the motion picture
industry.
In addition to being paid at or above the standard salary
level, employees must also qualify for one of the following exemptions to be
exempt from overtime:
· Executive Exemption
· Administrative Exemption
· Professional Exemption
· Computer Employee
Exemption
Definitions of the exemptions can be found on the U.S.
Department of Labor website.
As these rules are now in effect, be sure you evaluate them
to determine if they affect you or your business. Call us at (219) 769-3616 with your
questions, or email them to dvanprooyen@swartz-retson.com.
