Breaking News: New Overtime Rule

After a blocked Obama-era rule which would have doubled the threshold, the five-year fight to expand overtime pay to millions of workers is over.  The Department of Labor released the final rule on September 24, 2019. These changes will affect all employees currently classified as exempt.  Employees classified as exempt must pass the salary and duties tests.

What has changed?

  • The current salary level for exempt employees is $23,660 annually ($455 per week).  The new rule has raised the salary threshold for exempt employee to $35,568.  Any employee making less than $35,568 annually ($684 per week) will be reclassified as nonexempt and being earning overtime as of January 1, 2020

What hasn’t changed?

  • No changes have been made to the duties test that employees must pass in order to be classified as exempt.

What do you need to do before January 1, 2020?

  • Review the salary level for all employees currently classified as exempt.  If the current salary is below the new threshold you need do to one of the following:
    • Raise salaries to maintain exemption;
    • Pay current salaries with overtime after 40 hours;
    • Reorganize workloads to lower hours for employees to keep hours below 40 per week.

Please contact our office with any questions regarding the new overtime rule or if you would like help analyzing exempt employee wages.

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