New Overtime Rules take Effect December 1

REMINDER AND UPDATE:  NEW OVERTIME RULES TAKE EFFECT DECEMBER 1

We are about five (5) weeks out from the Department of Labor’s (DOL’s) new overtime regulations becoming effective, so it is worth reviewing your payroll to ensure ready compliance come December 1.  The following are key things to know about the new regulations:

• The regulations do not change the duties test or the salaried basis test required for Executive, Administrative and Professional (EAP) employees whom businesses want to classify as exempt from overtime pay.

• The salary level test, however, will change to $913/week. If you want to continue to classify an EAP employee as exempt from overtime compensation you will need to increase their salary to $913/week. If you do not, you can change their classification to non-exempt; meaning you will need to track their time worked and pay them overtime for all hours worked over forty (40).

• There is a new bonus rule! Employers will be able to count up to 10% of the employee’s salary paid in non-discretionary bonuses (e.g., incentive pay, commissions) toward the salary level. The bonuses must be paid at least quarterly.

• January 1, 2020, the salary level test will be raised again. The increase is projected to be $984/week, but will entirely depend on average salaries in the Southern Region of the U.S. as calculated by the Bureau of Labor Statistics (BLS).

• Pending legislation may delay the implementation of these regulations. We are at the mercy of the courts, but planning as though these new overtime rules will be effective in December is appropriate.

Please call the HR Hotline with any questions regarding this important legal change.

Thompson Coe and myHRgenius Tip of the Week is not intended as a solicitation, does not constitute legal advice, and does not establish an attorney-client relationship.