Supervisors and Administrators making less than $35,308.00 would get overtime pay under new U.S. Department of Labor (“DOL”) Rule.
More than 1 million additional workers would be entitled to overtime under the proposed new DOL Rule. The proposed Rule would go into effect January 1, 2020.
The most commonly applied exemptions to the overtime rules under the Fair Labor Standards Act are the executive (supervisor) and administrative (office manager) exemptions. Each has a two part test: (1) paid a salary of at least $23,660 per year and (2) certain duties.
I. New Salary Level.
The DOL proposes changing the salary level part of the exemption test: increasing it from $23,660 to $35,308.00 per year. The duties tests are not changing.
Many first level supervisors and office administrators (HR, accounting, payroll, schedulers, etc.), who make less than $35,308.00, would become eligible for overtime.
The employer will have to choose: (a) increase the salary or (b) start paying overtime.
II. Improper Employer Changes.
Some employers who choose to start paying overtime for these positions will try to improperly limit overtime pay:
- Failure to Pay for All Work Time. These salaried jobs did not track all work time previously. Many of these supervisors and administrators work before or after their shift, work through lunch, and complete paperwork or answer e-mails and texts from home after the work day. Employees in these jobs must be paid for all hours worked.
- Discouraging Reporting. Employers are not used to managing the overtime of these positions and some may discourage these employees from reporting all of their work time.
- Adjusting Time. Employers may also routinely adjust the time cards of these employees who are too busy or forget to clock in and out.
- Different Companies. Different Employers may try to improperly divide the time of these employees between different companies, in order to argue that the employee did not work more than 40 hours per week for a single employer.
- Two Job Rates. Employers may try improperly to assign these workers to two different jobs with different pay rates in order minimize overtime pay.
- Improper Overtime Rate. Some of the workers will also receive bonuses and commissions that need to be incorporated along with their hourly pay into the overtime rate.
- Straight Time. Some employers will try to improperly pay straight time for all hours worked rather than 1 ½.
This new proposal would update the salary threshold using current wage data, projected to January 1, 2020. The proposed rule recommends that the salary level be adjusted every four years.
The new salary level for the Highly Compensated Employees (HCE) will be $147,414, which is higher than under the Obama-era rule. The current level is $100,000 and the level under the Obama-era proposed rule was $134,004.
The KSN Overtime and Wage Claim team will monitor these proposed DOL changes. The new rule may lead to an increased need for our Overtime and Wage Claim services to make sure that our worker clients are properly paid for all work time.