Employee Overtime Exemption Changes for 2020

Employee Overtime Exemption Changes for 2020

What Florida Business Owners Need to Know About the Changes to Overtime Exemption Eligibility Coming in 2020

The United States Department of Labor has announced a new rule concerning overtime pay that will change how Florida businesses can classify exempt and nonexempt executive, administrative, and professional (EAP) employees. Starting on January 1, 2020, the Department will raise its minimum salary requirements for overtime eligibility for the first time in fifteen years. It’s estimated that more than 1.3 million workers will be eligible under the new rule.

Who Does the New Rule Apply To?

All businesses subject to the Fair Labor Standards Act (FLSA) should be aware of the Department of Labor’s new rule. Once in effect, employees making less than $35,568.00 a year will become eligible for overtime pay, as will highly compensated employees earning less than $107,432.00 on an annual basis. Employers can use nondiscretionary bonuses and other incentive payments, such as commissions, to account for a maximum of 10% of an employee’s base salary. However, these payments must happen at least once per year, and discretionary payments such as end-of-year bonuses cannot count towards the total salary.

What Steps Does My Business Need to Take?

If your business has any employees currently exempt from the FLSA’s overtime requirements, then you should immediately gather all compensation data for those earning under the $107,432.00 threshold. Next, conduct a review of your budget and any employment agreements while keeping an eye out for any positions that could be restructured, reclassified, or given a salary increase to meet the new requirements for 2020. You’ll then want to work out whether it will be more cost-effective to raise employee salaries or to reclassify their positions and pay them overtime. Now put your plan together and act on it fast – January 1st is rapidly approaching!

What Happens if I Don’t Meet the Salary Cap?

Under the new rule, employers who fail to meet the threshold for their exempt employee’s salaries for a given year have a final chance to provide a “catch up payment” to stay compliant. This catch-up payment is a one-time payout that you can give your employees to meet the new rule’s standard. However, it must be made by the first pay period following the year in question. Otherwise, you’ll be forced to pay them for that year’s overtime.

Does the Department of Labor’s new rule have you wondering if your business is compliant, or whether you should get those outdated employment agreements reviewed? Our firm provides employment agreements for hourly, salaried, and executive employees. You can schedule your consultation online or by calling (727) 279-5037.

About Us

FL Patel Law PLLC is a boutique business law firm dedicated to entrepreneurs and companies.

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