Are You Ready for the New White Collar Overtime Regulations?

On September 24, 2019, the U.S. Department of Labor (“DOL”) announced its final rule on the long-awaited “white collar” overtime regulations under the Fair Labor Standards Act (“FLSA”).  The new regulations, which are scheduled to go into effect on January 1, 2020, are expected to make approximately 1.3 million Americans newly-eligible for overtime pay, absent action by their employers.

The regulations update the salary threshold necessary to satisfy the “salary basis” prong of the executive, administrative, and professional exemptions under the FLSA from $455/week to $684/week (which, on an annualized basis, comes out to $35,568/year).  Although the new salary threshold will be 50% higher than its current level, it is still significantly lower than the $913/week threshold that was proposed by the DOL in 2016 and subsequently struck down in court.  The new regulations will also allow employers to use non-discretionary bonuses and incentive payments, including commissions, that are paid at least annually to satisfy up to 10% of the salary threshold. 

In light of these rapidly-approaching changes to the “white collar” exemptions to the FLSA’s minimum wage and overtime requirements, employers should review their job descriptions and pay practices to ensure that employees are properly classified as exempt or non-exempt under the law.  It is a common misconception among both employers and employees that paying an employee a salary means that he/she is not entitled to overtime.  Violations of state and federal wage and hour laws can be expensive for employers, as these statutes provide for attorney’s fees and liquidated damages to prevailing plaintiffs!

For any questions about this or any other labor and employment topic, please do not hesitate to contact the attorneys at Hoffman Hlavac & Easterly.