Knowledge Center / Blog
DOL Proposes Update to Overtime Eligibility
In early March, The United States Department of Labor released a proposal that seeks to modify which employees will be entitled to overtime under the FLSA. The DOL’s proposed change would increase the salary threshold, creating nearly one million more overtime-eligible workers. While not final, it’s likely this regulatory change will become effective January 1, 2020 and your organization can take steps now to reduce headaches later.
The Salary Threshold. The first question employers must answer when classifying an employee as exempt–or not eligible for overtime—is how much the employee makes each week. Currently, employees must earn at least $455 per week ($23,660/year) to be considered exempt from earning overtime; the proposed change would increase that amount to $679 per week ($35,308/year). This means all employees earning less than $679 per week would be considered non-exempt and eligible for overtime, not matter their job title or duties.
What’s not changing?
The Job Duty Requirement. In addition to the salary threshold, the position must meet specific job duty requirements set by the Department of Labor. The job description and position responsibilities are used to determine whether the exemption requirement is met, and these job duty requirements are not changing.
Positions must still meet the salary threshold and the applicable job duty requirements to be considered exempt from overtime under the FLSA. If a position meets the salary threshold but not the duty requirements, the position would be considered non-exempt and eligible for overtime.
What Organizations Should do Next:
Partner with HR. Businesses and managers should partner with HR to verify payroll data, review job descriptions, and work with HR experts on a solution that makes sense. Now is a great time to update job descriptions and conduct a compensation study. It may make sense to reclassify exempt employees as non-exempt, to increase current salaries to meet the new threshold, or some combination of both.