Effective January 1, 2020 - FLSA Overtime Rule Change


Effective January 1, 2020, the U.S. Department of Labor (DOL) increased the wage threshold for classifying employees as exempt from overtime pay under the Fair Labor Standards Act (FLSA). The threshold has been increased 50% from $455 to $684 per week. Annualized this is equivalent to $23,660 to $35,568 per year for full-time employees. Employees who make less than $684 per week are eligible to receive overtime pay (paid time and a half for any hours worked over 40 hours per week), regardless of their classification of salary or hourly compensation. The DOL estimates that 1.3 million workers will now be eligible for overtime pay.

Based on their classification as managers or professionals, previously exempt employees may now be eligible for overtime pay. Employers should review their employee classifications to determine overtime pay eligibility. 

Another change is the DOL now allows non-discretionary bonuses and incentive payments, such as commissions, to be counted as up to 10% of an employee's compensation. 

Other changes include an increase to the compensation threshold of highly compensated employees to an annual salary of $107,432 and special salary rules for US territories.
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