What You Need to Know About New Overtime Regulations
Updated: The final rule took effect in January 2020. It updates earning thresholds, among other items.
Last October we wrote a blog about what HR managers should be doing (at that time) to prepare them for the Department of Labor’s (DOL) proposed changes to overtime regulations. If you weren’t paying attention then, you certainly should be now as the proposed changes were recently finalized.
Getting to Know New Overtime Regulations
Scheduled to go into effect on December 1, 2016, the changes include three key elements described below by the DOL.
“The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:
1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134, 004); and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.”
Arguably the biggest change taking place affects those employees who earn less than $47,476 annually. As of December 1, they will be considered non-exempt and eligible to earn overtime wages.
In response to these changes, companies will have to face the big decision of either reclassifying employees or increasing pay for those nearing the threshold.
And, while I can’t claim to know the right solution for your company, I can help by providing you with a slew of resources from across the web. Below, I’ve included some of the most helpful articles – according to me – as I work through these changes on my own here at Sentric.
As a fellow HR professional, I’d encourage you to also share the wealth; if you find a good article or resource, let me know and I’ll add it to this blog. Simply reach out via Facebook or Twitter and be sure to check back as we make any updates.
Helpful HR Articles and Resources:
1. Read all about the approved changes straight from the Department of Labor in, “Final Rule: Overtime”
2. Once you’ve read the technical language, check out the below resources summarizing the change and discussing their potential implications.
- “Overtime Pay: What you need to know about the new rule” by Paul Davidson of USA Today.
- “White House Increases Overtime Eligibility by Millions” by Noam Scheiber of The New York Times.
- “The Implications of Overtime Pay Proposal” by Rachel Martin and guest Annie Lowrey of NPR.
- “Obama Administration Set to Extend Overtime Pay to Millions” by Melanie Trottman and Eric Morath of the Wall Street Journal.
3. Finally, review these helpful resources from SHRM* covering everything from the law in general to notifying your employees:
- FLSA Overtime Rule Resources: Everything you need to know about the FLSA overtime rule changes
- Latest News: Fair Labor Standards Act Overtime Regulations
- “Breaking the News: When Workers Lose Their Exempt Status” by Dana Wilkie
*Please note that some of this content may only be available to SHRM members via a unique login.