New Employment Rules Started January 1, 2020 Make More Workers Eligible for Overtime
The U.S. Department of Labor’s new mandatory overtime pay rules go into effect Jan. 1. The rule extends overtime pay to an estimated 1.3 million U.S. workers.
The new rule raises the threshold to $35,568, up from the previous threshold of $23,660 annually. That means workers who earn a salary (exempt workers) instead of an hourly wage are entitled to overtime pay if they earn less than $35,568 a year. Workers who are hourly (non- exempt) must receive at least one and a half times their regular pay after working 40 hours a week.
Several states, including New York and California, have salary thresholds that are higher than the federal standard for determining overtime eligibility.
Companies must analyze their workforce not only by salary but also job description. There are actually two parts to the executive, administrative and professional exemption tests. The first is that employees must be paid on a salaried basis that meets the minimum threshold. The second, often overlooked part of the test requires that employees also perform certain duties.
It’s time for companies to take a close look at the job descriptions for their employees and make sure they are classified properly.