Don’t Get Caught Off Guard By The New Overtime Regulations!
Over One Million Previously Exempt Employees Are Now Eligible For Overtime Pay
Starting on January 1, 2020, certain previously-exempt white-collar employees earning less than $684 per week (or $35,568 per year) are eligible for overtime. The previous threshold mandated overtime pay for employees earning less than $455 per week (or $22,660 per year). The Department of Labor’s increase of this threshold will cause more than one million previously exempt-employees in the United States to now be eligible for overtime pay.
In addition to the increase, the Department of Labor now allows for up to 10% of the employee’s weekly pay to come from bonuses, incentive payments, and commissions. The remaining 90% must be base pay. Additionally, the separate overtime exception for “highly compensated employees” now requires that those employees make a minimum of $107,432 per year, up from the previous $100,000.
This increase of the exemption threshold, which is governed by the Fair Labor Standards Act, is the first increase since 2004. Because of this, the increase may catch many employers off-guard. Failing to pay overtime to entitled employees is a serious mistake, regardless of why the failure occurred. Back pay can be sough retroactively by employees who were compensated incorrectly, and the Department of Labor is more than willing to sanction non-complying employers.
Because of the significant increase in the threshold, employers should take the steps to ensure that all currently-exempt employees will remain exempt after the January 1, 2020 changes. Employers should also take this opportunity to ensure that their employees continue to meet the definitions of executive, administrative, and professional employees (i.e. “white collar”) found in the Act.
The experienced and knowledgeable business, corporate, and employment law attorneys at the Loomis Law Firm are available to answer any questions you may have and provide you with expert guidance and advice in complying with these changes. Please feel free to contact us, or the authors directly.