As of January 1, 2020, the rules are changing regarding employees who are considered exempt from overtime pay. The US Department of Labor (DOL) released its highly anticipated changes to the overtime provisions of the Fair Labor Standards Act (FLSA) in mid-2019, and they go into effect on the first of the New Year. Failing to pay overtime to non-exempt employees is a common wage violation that many organizations engage in, and these types of violations are likely to become even more prevalent after the new standards become effective.
The FLSA requires most employers to pay non-exempt employees a premium for working overtime. According to federal law and the laws of most states, overtime is defined as exceeding 40 hours of work in a given week, as opposed to working more than 8 hours in a single day.
For example, if you work three consecutive 12-hour days but you do not work any other days during that week, you would not qualify for overtime pay, because your total hours for the week would only be 36. If a non-exempt employee does work more than 40 hours in a week, their employer is required to pay them an overtime premium of 50%, also commonly known as “time and half.”
Nearly all employers are required to pay overtime. Businesses that are covered by FLSA standards include those that have $500,000 or more in annual sales, and businesses that do not meet the $500,000 threshold but that engage in what Congress calls “interstate commerce”.
Interstate commerce is so broadly defined that it would even include businesses who make phone calls or send mail to and from another state.
Even the smallest entities would most likely meet the overtime pay standard, and you would be hard-pressed to find any organization that did not. It is also important to note that tax-exempt and/or nonprofit organizations are required to comply with overtime rules as well.
While it is highly likely that an organization is obligated to pay overtime, there has always been a question about which employees they are required to pay overtime to. These are what we have been referring to as “nonexempt employees”. There have always been certain employees that are exempt from the overtime rules based on their job title, job duties, and salary level. And this is where the DOL is making changes.
What is Changing with the Overtime Rules in 2020?
Here are the key changes in the final DOL overtime rules that go into effect in 2020:
Increase in the Standard Salary Level Threshold
Currently, the threshold for a salaried employee to be exempt from overtime pay is $455 per week or $23,600 annually for administrative, professional, and executive (a.k.a. “white collar”) positions. This means that under the previous rules, and organization did not have to pay overtime to an employee in this category who earned more than $455 per week. Under the new rules, this threshold is being increased to $684 per week, or $35,568 annually, which will include a lot more employees than the previous threshold.
Inclusion of Nondiscretionary Compensation in Minimum Salary Requirement
The DOL is introducing a new provision that allows employers to use nondiscretionary bonuses, commissions, and incentive payments to satisfy up to 10% of the standard salary level threshold for white-collar employees, as long as these forms of compensation are paid at least annually. This gives employers additional flexibility to meet the salary threshold for a nonexempt employee.
Increase in the Highly Compensated Employee Salary Threshold
The salary threshold for highly compensated employees is raised under the new rules from its previous level of $100,000 per year up to $107,432 per year. For highly compensated employees, at least $684 must be paid to them on a weekly basis, and the rest can be paid in nondiscretionary bonuses, commissions, incentives, and other forms of nondiscretionary compensation without the 10% cap that is in place with the standard salary threshold.
Questions about Overtime Violations and Other Employment Law Issues? Contact Attorney Kira Fonteneau for Assistance
The DOL estimates that 1.3 million workers will become eligible for overtime pay under the new rules. And as mentioned earlier, many organizations are already violating overtime pay rules in various ways, and the number of these violations is likely to increase.
If you believe you are entitled to overtime pay under the new rules but your Alabama employer did not pay you, there are legal avenues available to you, which may include monetary damages over and above what you are owed. To review your legal options, call attorney Kira Fonteneau today at 205-564-9005 or message us online to schedule a free consultation.