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 email@example.com.
Information taken from www.dol.gov.