On September 24, 2019, the United States Department of Labor announced a new final rule regarding eligibility for overtime pay.   The rule requires employers to revisit their classifications of employees as exempt in order to ensure compliance. 

As I discussed in previous articles (Texas Federal Judge Blocks New Overtime Rules and Speaking of Overtime Rules and One Final Overtime Update) the DOL announced rules in 2016 to dramatically increase the salary threshold in order for certain categories of employees to meet the standards for exemption from federal overtime requirements.  The rules were met with litigation and a stay of their enforcement. 

The new final rule raises the salary threshold from $455 a week to $684 a week, or $35,568 a year.  Employers may now use nondiscretionary bonuses and incentive payments, such as commissions to satisfy up to 10% of the salary level.  Employees will still have to meet requirements related to their duties in order to meet the standards of exemption for the overtime requirements. 

This final rule will become effective on January 1, 2020.  As we advised in 2016,  employers should take steps to ensure compliance by the end of the year.  The first step is to identify any employees who are classified as exempt but are making less than $422 a week, and develop a plan to reclassify those employees, or revise their compensation.  This is a good time to revisit the job duties of those employees to ensure that they meet the applicable standards for exemption in terms of their duties as well as their salary.  This is also a good time to review overtime policies to ensure appropriate recordkeeping, efficient use of overtime and compliance with applicable law. 

AMM can help employers navigate these new rules and review their employee classifications to ensure compliance and minimize risk.