Starting January 1st, 2020, the labor department will officially expand the number of workers who will be eligible for overtime pay, signaling the first such rule update in 15 years. This will make 1.3 million workers eligible for overtime pay under the Fair Labor Standards Act (FLSA). Is your business prepared? Use the following fact sheet to determine how you might be affected and what you can do.
Here’s what’s changing:
- The current law expiring in January, says most workers who make $23,660 per year (or $455 a week) are entitled to overtime pay. The new law updates this minimum salary threshold to $35,568 (or $684 a week)
- The total annual compensation level for “highly compensated employees (HCE)” will be raised from the currently-enforced level of $100,000 to $107,432 per year;
- The new law also allows employers to use nondiscretionary bonuses and incentive payments (such as commissions) to satisfy up to 10% of the standard salary level
Source: U.S. Department of Labor
How to prepare your business for 2020’s new overtime regulations
Some scenarios your business should consider…
If you have employees close to the new threshold, you have some options – all of which should be carefully considered. Every employee should be fairly compensated for their time, but incorrectly classifying certain employees could easily lead to ballooning overtime costs that cut sharply into your bottom line.