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Monday HR Minute: New DOL Overtime Rules Part 1
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New DOL Overtime Rules - Part 1: Summary and White-Collar Exemptions

Background:

The Fair Labor Standards Act (FLSA), administered by the Department of Labor, establishes duties and salary tests an employee must meet to be classified “exempt.” 

Employees not meeting the criteria of both tests must be classified as “non-exempt.”  These employees must be paid at least minimum wage for all hours worked and overtime for more than 40 hours worked in a workweek.  Employers must track and keep a record of the exact time worked to ensure all employees are paid correctly.

An employee who meets both tests is “exempt” from the minimum wage, overtime, and exact-time-record requirements (although you must keep payroll records of what they are paid).

Summary:

On September 24, 2019, the DOL released the highly-anticipated final rule increasing the salary level for “white-collar” and highly-compensated exempt employees for the first time since 2004.  These changes will go into effect on January 1, 2020.
White-Collar Exempt Employees:

Exemptions commonly referred to as “white-collar” exemptions are actually those classified under the executive, administrative, and professional (EAP) categories.  The salary requirement for these white-collar exemptions will increase to $684 per week ($35,568 per year) from the current $455 per week ($23,660 per year).  

Up to 10% of this standard salary level for white-collar classifications can be satisfied with nondiscretionary bonuses, incentive pay, or commissions, as long as the payments are made annually or more frequently.

The DOL estimates:
  • 1.2 million workers will become eligible for overtime pay if employers make no adjustments to their pay; and
  • 2.2 million non-exempt workers will have their non-exempt status strengthened because, even though their duties were close to making them eligible for an exemption, their salary level will now be below the required level.
There was no change to the “duties test” for white-collar exemptions or to the overtime rules for special groups such as first responders, nurses, non-management and production line employees, and non-management positions in industries such as maintenance, construction, etc.

You can access more details about this rule change on the DOL Fact Sheet #17G or review the full rule on the Federal Registry.

As always, feel free to call the HR consultants at Affinity HR Group to help you with these changes and considering all the impacts on your business.

Next week: Highly-Compensated Employees and Next Steps
 

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The Monday HR Minute, brought to you by Affinity HR Group, is designed to provide you with practical, applicable human resources and management advice and information in a format that will take you 60 seconds or less to read.  We believe that by dedicating just one minute a week to thinking about people management practices, business owners and managers can make enormous strides in improving workplace performance.
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This e-mail may contain general information about legal matters. Affinity HR Group does not provide legal counsel. The information provided should not be considered legal advice and should not be relied on as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about this content or any legal matter you should consult your attorney or other professional legal services provider.
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