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SilverFlash: U.S. Department of Labor Issues Final Overtime Rules

On Tuesday, September 24, 2019, the Department of Labor issued a final rule regarding overtime pay under the Fair Labor Standards Act (FLSA). Under the new rule, which will be effective January 1, 2020, any employee who makes less than $684 per week ($35,568 per year) will automatically be eligible to earn overtime pay.

“For the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans,” Acting U.S. Secretary of Labor Patrick Pizzella said. “This rule brings a common sense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”Overtime-Rules

In the final overtime rules, the Department is:

  • Raising the salary threshold from $455 per week ($23,660 per year) to $684 per week ($35,568 per year), an annual increase of $11,908;
  • Raising the total annual compensation level for “highly compensated employees” from $100,000 per year to $107,432 per year;
  • Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
  • Revising the special salary levels for workers in U.S. territories and in the motion picture industry.

More information about the final rule is available at www.dol.gov/whd/overtime2019/.

Employers will need to review all of their employees who are below the salary threshold and determine if they want to raise the employee’s salary to the new threshold or change the employee’s pay to an hourly rate. Keep in mind that if an employee is paid on an hourly basis, they would be eligible to receive overtime pay for any hours worked over 40 hours in a week.

In preparation for this change, employers should begin by ensuring every job has an updated job description. Having accurate job descriptions is essential because that documentation serves as the foundation for many key organizational functions such as hiring, training, compensating employees and managing employee performance. A well-written job description will contain all of the information needed to correctly classify a position under FLSA guidelines.

For more information about SilverStone Group’s compensation services, please contact:

Andie Gordman, SPHR, SHRM-SCP, CCP
Senior Consultant
agordman@ssgi.com
402.964.5624

Ashley Thomalla, PhD, CCP, GRP
Senior Consultant
athomalla@ssgi.com
402.964.5409

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