Salary Cut-Off Raised to $35,568 in New Overtime Ruling

October 22, 2019

A new overtime policy from the Department of Labor (DOL) states that employees making less than $35,568 per year are now eligible for overtime pay. On September 24, the DOL ruled for the new rate to take effect on January 1, 2020. 

To be exempt from overtime under the federal Fair Labor Standards Act (FLSA), employees must be paid a minimum salary of the latest threshold amount and meet certain duties. If employees are paid less or do not meet the set standards, they must be paid 1.5 times their regular hourly rate when exceeding 40 hours in their workweek.

The new rule raises the current salary threshold from $455 to $684 weekly or $23,660 to $35,568 annually.


Non-discretionary bonuses, Incentive Payments, and Commissions

Non-discretionary bonuses and incentive payments, including commissions, may be used to satisfy up to 10 percent of the standard salary level. 

The new rule also raises the salary cutoff for highly compensated employees from $100,00 to $107,432 a year with a minimum of $685 paid weekly.

What Employers Need to Know

Employers have the option to reclassify employees to nonexempt status or to raise salaries above the new threshold to retain classification.

If an employer chooses to reclassify their employees from exempt to non-exempt, it is important to implement a time tracking system—if the newly classified employees are not doing so already—and to clearly communicate that this is not a demotion, just a new federal policy.

Next Steps

Employers should begin pulling data for exempt workers who are earning below the new threshold. Current BeyondPay clients can do so by running a Base Compensation Report. 

Now is also an important time to review FLSA job duty thresholds. It’s important to remember that classification is not based on just salary level, but the white-collar exemption rules too. If you’re struggling to navigate the new rule, schedule a consultation for Managed HR services to see what a life-line to HR can do for your organization.

As always, current clients should reach out to the dedicated representatives through to help navigate any lingering questions for the new threshold. 

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