United States Department of Labor (DOL) is expected to issue a new proposal for a new salary threshold for several overtime exemptions under the Fair Labor Standards Act (FLSA). The proposal is expected to be issued in the near future. As the current minimum salary amount is $684/week, it is expected for DOL to increase the threshold from its minimum amount – to potentially impact millions of lives across the United States.
What is DOL overtime Threshold?
DOL overtime threshold is a salary level issued by the Department of Labor (DOL) that sets the standard for employers to understand which employees are eligible for overtime pay when they exceed their 40 hours of work in a week.
These federal rules that govern overtime pay are established by FLSA (Fair Labor Standards Act), which helps describe and differentiate between exempt and non-exempt employees.
Unless exempt, employees that fall under the Fair Labor Standards Act must get their overtime pay for each extra hour worked over their standard 40 hours of the workweek. FLSA defines a workweek to be a consecutive seven-day period of time. Though employers can choose to pay higher overtime rates at their will, employees must be paid at a rate not less than 1.5 of their regular pay rates. Employers need to be well informed and aware of minimum federal standards and follow them respectively.
On the other hand, exempt employees are not qualified for overtime pay. Individuals are classified as exempt status – for their certain job duties and roles (not titles). While these roles are typically salary-based, non-exempt employees are usually hourly-based.
It isn’t under FLSA rule to pay overtime for extra work done on Saturdays, Sundays, holidays, or regular days of rest. The Act only falls into place if overtime is worked those days. An individual aged 16 and above can work in any workweek without any limitation by FLSA on the number of hours.
In general, the overtime pay earned must be paid on the regular payday along with the wages earned. Averaging of hours over weeks is not permitted.
How will the New DOL overtime threshold impact employees and employers?
Although many unions and workers expect DOL to match or exceed the $921 salary level proposed in the 2016 rule, such an increase will definitely impact millions of employees for good but federal courts will most certainly face instant resistance from private corporates and employers. Though several groups expect the amount to be set at $1000/week, experts in the field expect DOL to set the salary threshold around $800 – the midpoint between what was proposed in the 2016 rule and the current salary level.
Regardless of changes in salary threshold, employers who rely on exemptions must be on notice of potential changes. DOL will most certainly grant employers a few months of lead before implementing the new salary threshold, as employers will need time to adjust to the impacts of the dramatic increase. Employers need to carefully review all the new federal laws and practices, and potential FLSA liability in the light of these possible changes.
The last threshold issued had impacted employers and employees negatively, in a way that it changed exempted employees to non-exempt, influenced salary calculations, and also changed employee classifications. It influenced many job descriptions and positions based on duties and roles. Therefore it’s very important to classify individuals under FLSA guidelines, whether they are exempt or non-exempt.