On Tuesday, September 24, 2019, the Department of Labor published its Final Rule to the "white collar" overtime exemptions, making roughly 1.3 million Americans eligible for overtime pay. The Final Rule, which goes into effect on January 1, 2020, raises the salary threshold for overtime exemptions from $455 per week to $684 per week (equivalent to $35,568 per year for a full-year employee).
Employers may also use non-discretionary bonuses and incentive payments, including commissions, to satisfy up to 10% of the new salary threshold, so long as they are paid at least annually. The rule also raises the total compensation requirement for “highly compensated employees” from the current $100,000 per year threshold to $107,432 per year.
Use this tool to calculate the potential financial impact of this rule for your unique workforce.
Employers should remember that meeting the salary threshold is just one requirement for classifying workers as exempt and it is not enough simply to pay an employee above the salary threshold in order to avoid paying overtime to that employee. In order to be exempt, employees must also meet the "duties" tests for one of the recognized exemptions. Each of the "white collar" (executive, administrative, and professional) exemptions has a different "duties" test.
DID YOU KNOW ... All employees are presumed to be classified as non-exempt. Employers have the burden to show that an employee qualifies as overtime exempt under any applicable federal and state laws. Even though an employee may qualify for exempt status, an employer may decide to keep the employee as non-exempt for business reasons. Employers should review whether an employee qualifies as overtime exempt with legal counsel, including review of the duties and salary tests. This calculator only assists with financial analysis of potential costs associated with the new rule.
For more information on the Final DOL overtime exemption ruling, read Department of Labor (DOL) Issues Final Overtime Rule or contact a OneDigital consultant.
NOTICE: This calculator is for educational purposes only and is designed to provide basic mathematical estimates, based on the input you provide, for the purpose of reviewing the financial impact of the new FLSA overtime rule on your business or a given individual, and does not constitute legal or tax advice. Note that the final rule only affects the federal Fair Labor Standards Act (FLSA). Some states may have more restrictive rules on qualified overtime exemptions, including both the duties test and salary test which may be affected by higher state minimum wage laws. Employers should review which overtime exemption rules apply to them. Estimates assume salary is earned over a 12-month span.