Overtime Reform is Coming Soon

15 Clock Closeup

The DOL proposed changes to overtime pay and exemptions; it’s time to prepare. 

The Department of Labor (DOL) finalized changes to overtime regulations—a move that will change the exempt status of millions of American workers, making them eligible for overtime pay. 

Nextep is preparing clients for the planned changes leading up to the 2020 effective date. Employers need to plan now for how to handle changes to their employees’ pay. 

Here are the new overtime rules:

The new rule will be in effect on January 1, 2020.

The minimum salary threshold for classifying an overtime pay exempt employee will rise from $455 per week to $684 per week, equivalent to $35,568 per year. Employees must earn at least $35,568 per year under the proposed rule to even be considered exempt from overtime pay. Any previously overtime-exempt employee who meets the new requirements will now be eligible to earn overtime pay at a rate of 1.5 times their regular rate of pay.

Overtime exemptions are not determined by an employee’s pay alone. Employers need to review the employee’s primary duties and whether they fall into one of the DOL-approved exempt categories.

At this time, overtime-exempt categories include:

  • Executive
  • Administrative 
  • Professional
  • Computer employee
  • Outside sales
  • Highly compensated

Categories that are never exempt, no matter how highly compensated they are, include blue-collar workers and first responders. 

A person’s job title or pay rate alone is not enough to determine overtime exemption. It is important to carefully review the employee’s primary job duties with your HR business partner at Nextep to determine how to correctly classify them.

The DOL is not proposing changes to the exemption categories yet, but the definitions and classifications of these categories could change once the proposed rule is released. Use the DOL’s duties test to determine if an employee would qualify for overtime exemption based on their job duties. 

As we mentioned, the new rule will be effective on January 1, 2020. It can be difficult to plan for the financial implications of these changes and to determine whether an employee meets the requirements of the overtime-exempt duties. Nextep’s HR experts are here to help! Contact your Nextep HR business partner (HRBP) today for step-by-step planning.

Also on Nextep

Spoiler Alert: Yes We frequently see a question posed to HR pros: “Do I have to pay my employee if…?” We’ll go ahead and give you a major hint at the outset. In many of the scenarios we see, the answer is yes, you do have to pay your employee. Here are a few scenarios. […]
Read more
The Answer Depends on Your State…For Now As we reported in January, non-compete agreements preventing employees from working for competitors are becoming increasingly unenforceable. The FTC is currently working on banning them at a federal level, but unless and until that decision comes, non-competes are enforced at a state (and sometimes even local) level.  As […]
Read more
When hiring workers, knowing whether they’re employees or independent contractors is essential. The difference between the two can significantly impact your business, including your tax liability, your liability for workers’ compensation claims, the worker’s rights and benefits, and your ability to control how your workers do their jobs. Read all about it here, and check […]
Read more
Employers Must Now Prove “Substantial Increased Cost” to Deny Religious Accommodation Recently, the Supreme Court ruled that employers must now demonstrate a substantially increased cost to deny an employee’s request for a religious accommodation.  This ruling, which comes in the case of Groff v. DeJoy, clarifies the standard for “undue hardship” under Title VII of […]
Read more
Here’s How the Recent Ruling Affects Your Company You may have read that in late June, the Supreme Court struck down affirmative action in college admissions. Here’s the implication this ruling could mean for you as a small or medium-sized business owner. To be clear, the Supreme Court’s decision on affirmative action does not explicitly […]
Read more
The new Form I-9 is here, and it has some changes that you need to know about. The latest version of Form I-9, Employment Eligibility Verification, took effect on August 1, 2023. Employers should take note this new form has a few changes. Here’s a quick rundown. Employers must use the new form for all […]
Read more
Your Cheat Sheet to Poster Penalties We all know the importance of labor posters, but did you know how much noncompliance could cost you? Let’s take a closer look at what this means for employers. Each poster has its own associated fine if not displayed. The DOL and EEOC have set fine levels that include: […]
Read more
Navigating I-9 Compliance Though the COVID-19 pandemic has officially ended, we’re still seeing changes to compliance in the aftermath. Today, we bring you important information about form I-9.  The U.S. Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE) recently made an announcement about form I-9. The flexibility to check identity and […]
Read more
Are you ready for the new regulations impacting your state? In July and August, several states will implement noteworthy updates to their employment laws, bringing changes and protections for workers. These updates address various aspects of the employment relationship, including wages, benefits, discrimination, and harassment. One area of focus has been minimum wage adjustments. Many […]
Read more
Are You Paying Your High-Earning Employees Correctly? In a recent case, the Supreme Court issued an opinion clarifying the overtime-exempt status requirements under the Fair Labor Standards Act (FLSA).  The ruling emphasizes the importance of the salary-basis requirement for high-earning employees to be overtime-exempt under the FLSA. Here’s what you need to know: Under the […]
Read more
Don’t worry. Nextep’s payroll processing is unaffected by the SVB closure. At Nextep, we understand that the recent closure of Silicon Valley Bank (SVB) has caused concern for our clients and their employees who bank with SVB. We want to assure you that Nextep’s ability to process payroll remains unaffected by this event. We are […]
Read more
On December 29, 2022, President Biden signed into law two bills that add protections for pregnant and post-partum employees. Here is what we know. Providing Urgent Maternal Protections for Nursing Mothers Act The PUMP Act amends the Fair Labor Standards Act (FLSA) to expand coverage to all employees (exempt and non-exempt). Employers are required to […]
Read more

Download Our App