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Notice: Changes to Overtime Rule for Employees – FLSA

Guess what: earnings thresholds necessary for employees to be considered exempt from protections under the FLSA have increased to $35,568 effective January 1, 2020.

What does this mean?

The Fair Labor Standards Act (FLSA) is a law created to protect employees from non-compliant and unfair treatment in the workplace.

Under this act, minimum wage, pay eligibility, recordkeeping, and child labor standards are all established. These standards have an impact on both full-time and part-time employees in the private sector and federal, state, and local government capacities.

An individual may be classified as what is called an “exempt employee” if they meet certain duties tests, one of those being the threshold salary level. Read more on nonexempt vs. exempt employees.

This new overtime rule, announced by the U.S. Department of Labor (DOL), raises the salary threshold for exempt employees to $684 a week ($35,568 a year) from a previous $455 a week ($23,660 a year). If the employee makes less than the $35,568, they will now be considered nonexempt and all FLSA protections apply. It is important to reevaluate your employee classifications with this new rule to avoid any statutory penalties.

Other Changes

The DOL also announced:

  • The total annual compensation requirement for “highly compensated employees” has been raised from the current enforced level of $100,000 per year to $107,432 per year.
  • Employers can now use nondiscretionary bonuses and incentive pay (including commissions) paid at least annually to satisfy up to 10% of the standard salary level
  • Special salary levels for workers in the U.S. territories and motion picture industry have been revised

Please remember to check with laws specific to your state as they may have additional requirements.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.