New Salary Level Test For Overtime

You must be paid at least $684.00 per week or $35, 568.00 per year beginning January 1, 2020, to be denied overtime as an Executive, Administrative or Professional employee. The announcement today raises the salary level for the most common Fair Labor Standards Act exemptions from overtime.

The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In the final rule, the U. S. Department of Labor is:

  • raising the “standard salary level” from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raising the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
  • revising the special salary levels for workers in U.S. territories and in the motion picture industry.

The final rule will be effective on January 1, 2020.

To be denied overtime because you are a salaried Executive, Administrative or Professional employee is a two-part test. The first part of the test is that you be paid a salary. The second part of each test requires certain job duties. Just because you are paid a salary does not mean that you can be cheated out of overtime pay at 1 ½ times your Regular Rate of pay. Your job must pass the second part of the test as well: specific duties defined by the exception. For more about the required duties see:

Executive Exemption

Administrative Exemption

Professional exemption

The increases to the salary thresholds are long overdue in light of wage and salary growth since 2004. Some employers may decide not to increase the salaries of previously exempt employees. Those now hourly employees will need to educate themselves about how the overtime rules work so that (1) they are paid for all time worked, and (2) that the overtime rate is calculated correctly. For example, many bonuses and commissions need to be added to the hourly wage when calculating the Regular Rate for overtime pay.

For those employees who salaries are increased in order to still fall within the overtime exemptions, it is a good time to examine whether the job duties really qualify for the exemption. For example under the Administrative exemption, you may not really have significant authority and discretion because you are micro managed by the boss and do not qualify for the exemption. Similarly for the Professional exemption, your job title might be “systems engineer” but the job duties do not really require engineering activities because the job follows such detailed installation manuals.

With the increased salary level required for the Executive, Administrative and Professional exemptions; employees would be wise to make sure they are not cheated out of overtime.

Employees who are owed overtime can collect (1) back wages for all “Hours Worked” and any unpaid overtime, plus (2) liquidated damages in an additional amount of the same back wages and overtime, and (3) attorney’s fees and costs.

The Ken S. Nugent, P.C. Overtime and Unpaid Wages team of attorneys can help you determine whether you are entitled to overtime pay.  Our team covers the entire state of Georgia. We have eight Georgia offices ready to protect workers in not only large cities but also small towns and rural areas who are being cheated on their earned overtime.  We have an office with overtime attorneys near you: Albany, Atlanta, Augusta, Columbus, Duluth, Macon, Savannah, and Valdosta.  To reach one of our overtime team of attorneys, please contact us at 1-888-579-1790 or leave us your information and questions at our Overtime and Lost Wages website practice page.

 

 

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