About 1.3 million American workers are newly eligible for overtime pay. Are your employees among them?
The U.S. Department of Labor (DOL) updated the earnings threshold necessary to exempt executive, administrative and professional employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements. The rule, which went into effect January 1, 2020, also allows employers to include certain nondiscretionary bonuses, incentive payments, and commissions as part of employee salaries.
According to the DOL, the new overtime pay ruling includes:
- Raising the “standard salary level” from $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker).
- Raising the total annual compensation requirement for “highly compensated employees” from $100,000 per year to $107,432 per year.
- Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level.
- Revising the special salary levels for workers in U.S. territories and the motion picture industry.
More information from the DOL can be found here. If you haven’t already done so, be sure to evaluate employee compensation to determine who may be affected. You may even need to update your employee handbook, restructure pay, and take these other considerations into account. And be careful how you calculate hourly wages, salaries, and other compensation to avoid scrutiny. Feel free to contact us with questions.