Last week, the U.S. Department of Labor (DOL) raised the salary threshold for the Fair Labor Standards Act’s (FLSA’s) exemptions cutoff from $455 a week to $684 a week ($35,568 annually) for workers classified as exempt from overtime pay, In addition to meeting the minimum salary requirement, employees also must perform specific duties to be eligible for the FLSA’s exemptions, some of which have changed. But a lawsuit over a 2016 ruling that was supposed to lift the threshold even higher is still pending. There is no word yet on whether or not the new federal overtime rule will also be challenged, or what is to become of the ongoing lawsuit.
Confused? You are not alone.
It’s a weird state of affairs for employers who are now left wondering what comes next, and what should companies do in the meantime. The new ruling, set to take affect on the first day of 2020, is estimated to extend overtime protections to more than 1 million workers who are not currently eligible under federal law. The 2016 rule that is currently blocked would have doubled the threshold, but a federal judge halted it by saying the DOL exceeded its authority by significantly raising the rate. The DOL appeal is still pending before the 5th U.S. Circuit Court of Appeals. The Society for Human Resources Management (SHRM) reports that, while it is widely expected that that the DOL will move to dismiss its own appeal, it has not happened yet.
So what should businesses do now?
How can companies prepare for the FLSA overtime rule change on January 1, 2020?
January will be here before you know it. SHRM recommends that employers take action based on the new rule. They should review job descriptions and budgets in light of this new ruling. Companies should thoroughly understand the new duties test, as well as develop a communications strategy and training program to better explain any job re-classifications that may be necessary for compliance. Additionally, employers would be wise to check into their state overtime rules as well.
For more information about what employers should know about this new overtime ruling, go to SHRM’s informative resource page.
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