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The U.S. Department of Labor (DOL) has issued its long-anticipated final overtime rule. The new rule, effective Jan. 1, 2020, raises the minimum salary threshold from $455 per week to $684, which is $35,568 annually.
Given the far-reaching implications of the new overtime rule, it is crucial for employers to ensure their businesses are in compliance. Similarly, employees should be aware of their rights under the DOL’s new overtime rule. The best way for both camps to understand their obligations and rights, respectively, is to consult an experienced employment law attorney.
Obama Era Overtime Rule
The new rule raises the minimum salary threshold far lower than the $913 per week salary level proposed by the DOL during the Obama Administration. The DOL issued final rules for salary thresholds in 2016, however, a federal judge in Texas held those rules to be invalid because they supplanted an analysis of an employee’s duties. The DOL came to the $684 weekly level in response to comments from the business community calling for a lower threshold.
In addition, the new rule also raises the annual salary threshold for highly compensated employees from $100,000 to $107,432. It is important to note that employers are permitted to use annual bonuses and incentive payments to meet up to 10 percent of the new salary threshold.
As employers consider their 2020 budgets, it is necessary for them to review compensation packages of exempt employees who earn less than the new thresholds. In short, employers have two options: raising the employees’ salaries to meet the new salary level or convert workers to an hourly pay rate. Finally, employers in New York should be aware that the state’s annual exemption amount is higher than the new salary level established by the DOL.
What does the overtime rule mean for employees?
According to the DOL, the new exempt employee salary threshold could make an additional 1.3 million workers eligible for overtime pay. While this is a positive development, it is crucial for employees to know their rights and make sure they receive the overtime pay to which they are entitled.
Unfortunately, it is not uncommon for unscrupulous employers to put profits ahead of their workers by cutting overtime pay or not paying overtime at all. In fact, unpaid overtime is one of the most common wage and hour law violations. If you are an employee who believes you have been wrongfully denied overtime pay, you should consult an experienced employment law attorney to clarify your legal options.