Currently, employees who are exempt from receiving overtime pay for working over 40 hours in a workweek must make $455 a week or $23,660 annually. As of January 1, 2020, this amount will increase to $684 per week or $35,568 annually based on the new overtime rule changes. It is worth noting that employers are not allowed to prorate these weekly or annual amounts for part-time employees.
The new rules will allow employers to use certain nondiscretionary bonuses, incentive payments, and in some instances, commissions to satisfy up to 10% of this new salary threshold.
In addition to this salary threshold, exempt employees must also meet specific duties tests to be exempt from overtime pay in their Administrative, Professional, or Executive classifications. If you have questions about these duties tests please contact Anderson ZurMuehlen for assistance.
Based on this new information, we are encouraging our clients to look at those employees they have classified as exempt from overtime and see if you may need to make adjustments come January 1, 2020. If you wish to discuss your options please reach out to us – we would love to be of assistance.
Finally, the Federal Government has published a disclaimer that its final rule may change slightly over the next few months. In addition, there is also the possibility of a legal challenge to this new salary threshold that could delay implementation.
If you have questions or wish to discuss your options, please contact Anderson ZurMuehlen. We look forward to being of assistance.
This article was written by John Cummings, MBA, PHR, SHRM-CP, Human Resource Director / HR Consultant.