The Fair Labor Standards Act (“FLSA”) is the federal law requiring employers to pay time and a half to most employees who work more than 40 hours in a work week. On September 23, 2019, the Department of Labor issued some new rules that significantly changed the overtime requirements of the FLSA. These new rules took effect on January 1, 2020.
By far the most important of these changes has to do with which employees are considered “exempt“ from the overtime laws. To be considered exempt, an employee must meet two conditions: (1) they must be performing a category of work recognized as exempt, and (2) they must be receiving a regular salary that normally does not vary based on the amount of hours they spend working. Furthermore, in order for the exemption to apply, the salary the employee receives has to be above a certain threshold. That threshold is where the new rules come into play.
Under the old rule, an otherwise exempt employee who was paid a salary of as little as $23,660 a year ($455 a week) was not eligible to be paid overtime when they worked more than 40 hours. On January 1, however, that amount was increased to $35,568 a year, or $684 per week.
As a result of this change, it is estimated that approximately 1.3 million salaried workers who were previously exempt, and were not entitled to overtime pay, will now be eligible to get time and a half their regular rate of pay whenever they work more than 40 hours in a work week.
For employers who employ workers like these, this does not just mean having to pay overtime when they did not have to pay it before. It also means they now have to keep close track of the hours such employees work. There is no obligation to keep track of the hours of “exempt“ employees, but now a great number of previously exempt employees will be considered non-exempt, and their hours will have to be tracked.
If you are an employer or employee who may be impacted by these important new rules, and need guidance on your rights and responsibilities, be sure to seek competent legal counsel as promptly as possible. Mistakes in this area can be very costly.