The U.S. Department of Labor finalized its overtime rule which will become effective on January 1, 2020. Notably, the DOL increased the threshold for the FLSA overtime exemption from $23,660 to $35,568 per year, or $684 per week. The DOL also increased the “highly compensated worker” threshold from $100,000 to $107,432. This seemingly brought an end to a period of uncertainty which began on November 22, 2016, when a federal district court issued an injunction blocking the implementation of the Obama administration’s final overtime rule which was set to go into effect on December 1, 2016.
Employers should pay close attention to the hours worked by employees who earn less than $35,000 and who work overtime. It makes sense to consider raising salaries above $35,000 for those employees that regularly work overtime. Fortunately, the timing for making any salary changes to accommodate the new overtime rule is good, since employers often give raises effective in the beginning of the year. Employers should also ensure that they have not misclassified employees as independent contractors in order to avoid exposure to claims for unpaid overtime and benefits.