More Employees Included in the Final Rule on Overtime Pay

Learn more about the Department of Labor’s final ruling on overtime pay.

Recently, the Department of Labor (DOL) approved a change that drastically affects how employees will be paid for overtime work.  Their final ruling on overtime pay makes employees who earn less than $35,568 annually eligible for overtime pay starting January 1, 2020.  This new rule increases the salary threshold from the current $23,660.

Under the federal Fair Labor Standards Act (FLSA), employees who meet the salary threshold and meet certain duties tests are entitled to overtime pay.  This amounts to 1 ½ times their regular hourly rate for the hours that exceed the standard 40-hour work week.

According to experts, the newly updated rule should prompt employers to reclassify over a million workers to non-exempt status.  Additionally, many employers will respond by raising pay, so their employees are over the new salary threshold.

The Society for Human Resource Management (SHRM) is excited about this new ruling.  According to Nancy Hammer, SHRM’s Vice President of regulatory and judicial engagement, “Employees and employers have been waiting for an overtime salary adjustment for over ten years.  [The new] rule provides important clarity for the workplace on FLSA implementation.”

The new rule allows annual nondiscretionary bonuses and incentive payments to count for up to 10% of the standard salary level.  Employers should also note that the ruling does not make any changes to the duties tests.  Additionally, employers will be relieved to know that the rule doesn’t call for automatic adjustments to the exempt salary threshold.  However, the DOL states that it intends to update salary thresholds more regularly in the future.

This is what you need to know about the DOL’s final ruling on overtime pay.    Looking for a consulting firm with experience working with salary, legal, and other human resources issues?  Then don’t hesitate to contact the professionals at McKnight Associates, Inc.  We are ready to offer you hands-on human resources consulting for colleges, universities, medical centers, and organizations of all sizes.