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The Department of Labor’s new overtime rule went into effect on January 1, 2020. The new rule raised the Fair Labor Standards Act’s (“FLSA”) salary threshold for workers exempt from overtime to $35,568 annually, or $684 per week. See 29 C.F.R. part 541. The threshold was previously set at $23,660 per year, or $455 per week, before the overtime rule was updated. The new rule also raised the total annual compensation requirement for “highly compensated employees” from $100,000 per year to $107,432 per year. In light of these changes, employers should make sure that exempt workers’ salaries are at or above the new salary thresholds.

Employers are urged to keep in mind that the salary threshold is just one piece of a larger puzzle. An employee is exempt from overtime if they: (1) are paid on a salary basis; (2) earn at least the FLSA salary threshold; and (3) meet the job duties test for the applicable overtime exemption (e.g., executive, administrative, professional, computer, and outside sales). Further, state law may add additional requirements for exempt status that differ from those found in the FLSA. 

We recommend that employers conduct regular audits of each employee’s payroll status to make sure that applicable federal and state exemption requirements are met. An audit may include reviewing employee job descriptions to make sure they match up with each employee’s actual job duties and confirming that each employee’s actual job duties satisfy the job duties test for the applicable overtime exemption. Please contact Jordan Rohlfing or any other member of DeWitt’s Employment Relations practice group if you need any assistance implementing the DOL’s new salary threshold or conducting an audit of your employees’ payroll status.