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The U.S. Department of Labor Announces New Federal Overtime Rule

October 14, 2019

                                             

 

The U.S. Department of Labor announced the Final Overtime Rule which will go into effect this coming year, January 1, 2020. The Overtime Rule changes the eligibility requirements for executive, professional and administrative exemptions from overtime pay under the Fair Labor Standards Act (“FLSA”). Under the Final Rule:

  • minimum salary increases from $455 per week to $684 per week, the equivalent of $35,568 per year
  • nondiscretionary bonuses and incentive payments, such as commissions, may be used to satisfy up to 10 percent of the salary level
  • minimum total annual compensation for highly compensated individuals from $100,000 to $107,432
  • does not change the duties basis for exemptions

We suggest that employers review their payment practices to ensure that any employee who is currently classified as exempt will qualify to remain so under the final rule. Those who do not make at least $684 per week must be re-classified as non-exempt and must be paid overtime pay for hours. We further suggest that employers should take the opportunity to evaluate the job duties of exempt employees to determine if this criteria is satisfied, employers must consider the actual duties performed rather than focus on a job title, job description, or what the employer thinks an employee should be doing. Misclassification of employees continues to be a frequent subject of state and federal enforcement actions, and the number of FLSA cases is also on the rise.

If there are any questions please reach out to David McComb at dfmccomb@zarwin.com and Zachary Silverstein at zsilverstein@zarwin.com.


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