Because of proposed changes by the Department of Labor, it’s time to reassess any employees you’ve classified as exempt. The new changes will affect an estimated 1M+ exempt employees who will become eligible for overtime pay.
Are you ready for the new salary-level test that goes into effect in January 2020?
The final regulations should be released by the end of the year, with the regulations taking effect in January, 2020, so now is the time to analyze the regulations and determine how they’ll impact your business while deciding what steps you need to take make sure you comply with Fair Labor Standards Act (FLSA) regulations when the new law when it goes into effect.
What DOL has proposed
Back in March, DOL proposed in a Notice of Proposed Rulemaking that it intends to increase the salary-level test to $679 per week ($35,308 annually). They also proposed that the salary-level test for “highly compensated employees” be changed from $100,000 to $147,414 annually.
Under the FLSA, employees must be paid time and a half for all hours worked over 40 hours every week unless they’re exempt, which is determined by the FLSA’s 3 prong test. An employee must satisfy all three tests to be exempt from overtime pay:
- salary basis test (a fixed, predetermined salary that doesn’t fluctuate);
- salary-level test (a minimum specified weekly amount); and
- duties test (the employee’s job responsibilities must primarily involve “white collar” executive, professional, or administrative duties).
For employees who are currently exempt, salaries below the $679 per week ($35,308 annually) will need to increase to satisfy the new salary-level test, or overtime pay will need to be paid for all overtime hours worked each week. Job duties should also be reviewed for all exempt employees who earn between $100,000 and $147,414 annually to make sure they meet the complete duties test.