Marketing & Design: A Publication of Face To Face Marketing

New DOL Overtime Rules for 2020

By Samantha Brinkley, MA, SHRM-SCP

Have you heard about the new Department of Labor Overtime Rules that went into effect on January 1st, 2020? Over 1.3 million employees are expected to be impacted by the Trump Administration’s new rule, which requires that exempt, salaried employees be paid at least $684 per week, or $35,568 annually. The previous threshold, established in 2004, was $455 per week or $23,660 year. Employees who do not meet the new salary level must be classified as non-exempt and be paid overtime for all hours worked over 40 in a workweek.

If you have exempt employees being paid below this amount, your organization has twooptions to comply with the law:

Step 1. Raise Salaries. You can raise an employee’s salary to satisfy the new rule and allowthem to remain exempt from overtime pay requirements. For example, if the employee wasmaking $455 per week, they would need a raise of $229 per week to meet the new threshold.

Step 2. Convert to Non-Exempt. If an employer chooses not to raise the exempt employee’s wages to at least $684 per week, they can convert the employee to non-exempt status and pay them on an hourly basis. This means they will need to track hours and pay overtime wages at the rate of 1.5 times the base hourly rate for all hours over 40 worked in a workweek. Marketing & Design 37

HINT: your company needs to establish and publish its workweek schedule to employees. If employees routinely work over 40 hours in a workweek, it is acceptable to reassign job duties or hire additional help to reduce the overtime hours worked to reduce the impact of this regulation on your organization. Other caveats: Up to 10 percent of the salary may come from non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually.

The salary threshold necessary to qualify for the highly compensated employee (HCE) exemption increased $107,432 annually from $100,000. No automatic updates to the salary thresholds were set.

Finally, remember that to qualify for exemption from FLSA’s overtime requirements, an employee must be paid the salary level and perform exempt-level duties. Regardless of the employee’s job title, the duties performed must fall into one of these categories

Executive – Primary duty is management of two or more full-time employees and having some genuineinput into the job status of other employees (such as hiring, firing, promotions, or assignments.)

Administrative – Primary duty is office or non-manual work related to business operation and must rise to the level of significance (for example: receptionists are classified as non-exempt, regardless of pay, whereas office managers are generally classified as exempt as long as they meet the salary threshold.)

Professional – Learned Professionals: Primary duty is performance of work requiring advanced knowledge in a field of science or learning. This category includes doctors, lawyers, CPAs, engineers, teachers, and others who generally require educational degrees or advanced training to perform their roles. Creative Professionals: Primary duty is performance of work requiring Invention, Imagination, Originality, or Talent. This would include artists, actors, musicians, writers, and similar roles.

Computer Related – Primary duty is systems analysis, programming, or software engineering and othersimilar roles. Help desk and technician roles are not included.

Outside Sales – Primary duty is selling products or services at the customer’s place of business or home. Inside Sales employees are not included.If you classify an employee as exempt, it is a good idea to have a job description with duties that supports the classification in case of a Wage and Hour Audit.

If you need assistance in determining an employee’s status, contact a certified HR professional or one of the Rocket City Consulting Business Advisers at www.RocketCityHR.com for more assistance.