Galdean Law Firm Blog

Thursday, January 2, 2020

Changes to Overtime Pay Exemption

For years, employees were exempt from overtime based on the “While Collar” Exemption.  Among some of the requirements, the employee was required to be paid a specific amount per week.  A new DOL Rule changed this threshold amount effective January 1, 2020.  So, an employee not being paid this threshold amount may be entitled to overtime pay.

As of January 1, 2020, the DOL increased the minimum salary level for exemption to $684 per week ($35,568 per year).  The DOL also allows employers to pay up to 10% of that minimum level ($3,556.80) in commissions, bonuses, and other non-discretionary incentives. If these incentive payments fall short, however, the employer will owe overtime pay to the employees for the entire prior year.  An employer can have only a single pay period for a final make-up payment to ensure the exempt employee receives the full $35,568 for the year.

The new Rule now essentially makes many employees subject to overtime.  Additionally, the new Rule will raise questions as to whether the employer properly classified employees in the past. Employers or Employees with questions about proper classification for overtime exemption should contact an experienced employment law attorney.

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