NEW OVERTIME RULE RAISES SALARY TEST
A new rule issued on September 24, 2019 by the Department of Labor states that Employees who make less than $35,568 annually are now eligible for overtime pay. The new rule will take effect on January 1, 2020.
The rule allows for 10% of the compensation to be commission and bonus.
To be exempt from overtime under the Fair Labors Standards Act, employees must meet two tests; a salary test and a duties test. If they are paid less than the threshold amount, or do not meet the duties test, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 per week (in most states).
Employers should weigh the cost of raising employee salaries above the new threshold against the cost of reclassifying employees as nonexempt and paying overtime. This is an individual company determination that should be made in consultation with an HR professional and/or an employment attorney to ensure compliance with the new rule.