The holiday season is always a busy time, but this year will prove busier than usual for any employers that haven’t already finished preparing for the new overtime rules that kick in January 1 – just seven weeks from now.
Under these new Fair Labor Standards Act (FLSA) rules, the minimum annualized salary for most overtime-exempt employees will increase from $23,660 to $35,568.
If you’ve been taking a wait-and-see approach in the hopes of a last-minute reprieve – like when the 2016 overtime rule was struck down just days before it was to take effect – you should think twice.
Because the increase in the minimum salary is much lower this time around, it’s most likely that the 2020 rule will take effect as planned. Time is swiftly running out, so be sure get started as soon as possible if you haven’t already.
These are the main steps employers should consider taking:
- Identify employees who may need to be reclassified;
- Develop a new compensation plan for reclassified employees;
- Consider whether to count incentive pay toward the minimum salary level;
- Review wage and hour policies and processes;
- Develop a communication plan; and
- Prepare to train reclassified employees and their managers.
Further details – including tools and resources to help you carry out these steps – can be found at XpertHR.
Bear in mind that that the new overtime rules also mark a great opportunity for employers to reclassify employees whose job duties have changed or to respond to a potential misclassification.
Penalties for Noncompliance
Failing to get ready in time could prove costly. Employers that violate the FLSA can be held liable for unpaid wages and overtime, among other penalties. Individuals who play a key role in shaping an employer’s policies can even be held personally liable.
These costs can multiply quickly under collective actions. Last year, plaintiffs won almost eight in 10 wage and hour collective action certification decisions, according to a report from the law firm Seyfarth Shaw LLP.
In addition to employee lawsuits, government agencies continue to aggressively enforce the FLSA and analogous state wage and hour laws. This past fiscal year alone, the US Department of Labor recovered a record $322 million of wages owed to workers.
Do you have a question about the new overtime rules? If so, please let us know by leaving a comment below.