On September 24, 2019 the DOL finalized its federal overtime regulations which go into effect January 1, 2020.  This highly debated and publicized update essentially raises the bar to allow more employees to become entitled to minimum wage and overtime pay.

What changed as a result of the new regulations?

The DOL accomplished this by raising the salary level required under the executive, administrative and professional (EAP) white collar exemptions. This exemption was used by many employers to exempt workers from overtime pay by compensating them with a salary above the standard level.  The new regulations increase the standard salary by nearly 50% to $684 per week (or $35,568 per year). The current standard was set in 2004 and is $455 per week ($23,660 annually).

Salaried employees above the new threshold may still be eligible for overtime pay, but the eligibility varies based upon the specific job duties performed.

How will bonuses impact the calculations?

One additional change does allow employers to use non-discretionary bonuses, incentive payments, or commissions that are paid at least annually to satisfy up to 10% (or $3,557) of the standard salary level in a 52-week period.

What do you need to do next?

Employers should review their current exempt workers’ salaries and determine if it would be more beneficial to raise the employee’s salary to above the new standard or to update their payroll systems to allow for appropriate overtime pay.

If you have any questions, please call us at SobelCo at 973-994-9494 or reach out to Ellen Marvin at ellen.marvin@sobelcollc.com directly.