Effective January 1, 2020, important changes take effect concerning the payment of overtime wages in accordance with the Fair Labor Standards Act (“FLSA”). Generally, FLSA requires that non-exempt employees are paid time at least one and one-half times their regular hourly rate for every hour worked over 40 hours per week.
Both employers and employees should take note of these changes.
- The new rule changes the regular rate requirement for employees who qualify for “white collar” exemptions: employees employed in a bona fide executive, administrative or professional capacity.
- This rate will be increased from $455 per week or $23,660 per year to a rate of $684 per week or $35,568 per year.
- This means that an employee making less than $35,568 per year (or $684 per week) will not qualify for white-collar exemptions and must be paid overtime on all hours worked in excess of 40 hours per week.
- While this is an approximate $12,000 increase from the current 2004 regulation, it is seemingly a comprise from the increase suggested by the Obama Administration in 2016 which would have been approximately $12,000 higher than this new regulation.
- Employers need to carefully review employees who have been previously classified as exempt under white-collar exemptions who make less than $35,568 per year (or $684 per week) and determine whether to reclassify them as non-exempt hourly employees (eligible for overtime) or whether to increase their salaries so that they are paid at least $35,568 per year (or $684 per week).
- Employers may need to make sure that they have enough funds to cover overtime rates, redistribute work so that it can be done in a 40 hour work week, and/or put new policies in place regarding overtime use.
As with all changes in employment law, employers should look at this as a good time to review policies and handbooks.
For more information about the impending changes to the FLSA overtime wage laws, click here. Click the following links for more information about WLG’s wage and hour law practice or WLG’s compliance advice and HR Consulting Services, including help with drafting handbooks and policies.