Employees who make less than $35,568 are now eligible for overtime pay under a final rule issued today by the U.S. Department of Labor (DOL). The new rate will take effect Jan. 1, 2020.
To be exempt from overtime under the federal Fair Labor Standards Act (FLSA), employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.
The new rule will raise the salary threshold to $684 a week ($35,568 annualized) from $455 a week ($23,660 annualized). A blocked Obama-era rule would have doubled the threshold, but a federal judge held that the DOL exceeded its authority by raising the rate too high.
The new rule is expected to prompt employers to reclassify more than a million currently exempt workers to nonexempt status and raise pay for others above the new threshold.
My experience is that the new law impacts small to medium sized business the most, as they’ll have a good number of employees labeled as exempt who have a salary in the low 30k’s. They’ll be some exposure to huge companies that still have salaried supervisors in places like call centers in the low 30k’s as well.
Feel bad about this? Remember that the Obama rule was going to raise the threshold to 47K, my friends.
More details here from CNBC.
A good rundown here from SHRM of second-level details you’ll need to know behind the broad threshold change.