FLSA Overtime Exemption Update

November 21st, 2019 | By Jules Halpern Associates | FLSA, USDOL

Starting January 1, 2020, the United State Department of Labor’s (“DOL”) new overtime regulations under the Fair Labor Standards Act (“FLSA”) will go into effect. The new regulations increase the threshold necessary for employees to meet the FLSA’s exempt executive, administrative, or professional status, which means an employee is exempt from overtime and minimum wage requirements.

In order to qualify for an executive, administrative, or professional exemption, employees must meet both the salary threshold and the exempt duties test, which includes a list of duties the employee needs to perform. The exempt duties test was unchanged by the new DOL rule.

The threshold moves from $455 per week ($23,660 per year) to $684 per week ($35,568 per year). In addition, the new regulations raise the total annual compensation level for “highly compensated employees” under the FLSA from $100,000 to $107,432. Further, the new DOL rule allows employers to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy 10% of the standard salary level ($35,568) as long as these payments are made at least on an annual basis.

To ensure compliance, employers need to review the exempt status of employees who earn less than the new earning threshold but were previously exempt. Employers must then decide whether to reclassify those employees as nonexempt (hourly) workers or increase their salaries to meet or exceed the new threshold of $35,568.

As a reminder, employees that are reclassified as nonexempt employees must be paid for overtime.  If an employer decides to increase employees’ salaries to meet the new earning threshold, they must then evaluate whether those employees’ job duties qualify for an executive, administrative, or professional exemption.

Jules Halpern Associates LLC

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Jules Halpern Associates LLC
JULES HALPERN ASSOCIATES LLC is a boutique law firm committed to serving our clients in all facets of their workplace issues. We provide personalized, practical advice that resonates with our clients’ business objectives.
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