White Collar Overtime Regulations Go Into Effect January 1, 2020

As the old song goes: “It’s the most wonderful time of the year.”  And although many of us are thinking about “parties for hosting, marshmallows for toasting, and caroling out in the snow,” there is still plenty of work to be done before the year ends.  In particular, there is one big issue that employers must address before 2020 is here: the changes to the “white collar” overtime regulations under the Fair Labor Standards Act (“FLSA”).

As you may recall, back in September, the U.S. Department of Labor (“DOL”) announced its long-awaited final rule on these regulations, which are scheduled to go into effect on January 1, 2020 and are expected to make approximately 1.3 million Americans newly-eligible for overtime pay, absent action by their employers.  

The main change is that the salary threshold necessary to satisfy the “salary basis” prong of the executive, administrative, and professional exemptions under the FLSA will be raised from $455/week to $684/week (which, on an annualized basis, comes out to $35,568/year).  The new regulations will also allow employers to use non-discretionary bonuses and incentive payments, including commissions, that are paid at least annually to satisfy up to 10% of the salary threshold. 

In light of these rapidly-approaching changes to federal wage and hour law, employers should review their job descriptions and pay practices to ensure that employees are properly classified as exempt or non-exempt under the law.  Non-compliance with state and/or federal wage and hour laws can be costly, as these statutes can award attorney’s fees and liquidated damages to prevailing employees.  Remember: an employee is not exempt under the “white collar” exemptions just because he/she receives a salary! 

For any questions about this or any other labor and employment topic, please do not hesitate to contact the attorneys at Hoffman & Hlavac.