Do you have control of the Clock? - New DOL Final Overtime Rule Expands Overtime to More Workers

On September 24, 2019, the Department of Labor (DOL) issued the final overtime rule effective January 1, 2020. The key for Employers is to take the necessary steps today to be in compliance by the new year with the Fair Labor Standards Act (FLSA) under this new rule. The changes expand the overtime rule to more workers that previously may have been exempt from overtime. Specifically, the new threshold raises the “standard salary level” from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full year worker). The rule also raises the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year.” The DOL is allowing employers to use non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and revising the special salary levels for workers in U.S. territories and in the motion picture industry. The Department of Labor estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the rule and has stated that the changes are long overdue in light of wage and salary growth since 2004. Employers should audit and access what individual workers will be affected by the changes in the Rule. If a conversion of the previously employee to a non-exempt employee is needed, it will be important to educate the previously exempt employee on proper reporting of time worked and for the Employer to consider what policies will need to be updated to reflect appropriate reporting and control of overtime worked. The specific job duty definitions have not been changed by this rule at this time and will still be required along with the new threshold salary requirement to meet the exemption requirements under the Fair Labor Standards Act.