HBS Alert- New Overtime Rules: What You Need To Know

Written by: Allison Averbuch, Esq.

On March 7, 2019, the Department of Labor issued a proposed rule change that would raise the salary test for exemption from overtime pay from $23,660 per year ($455 per week) to $35,308 per year ($679 per week).

What does the proposed rule change mean for my business?

  • If the rule becomes final, many employees making between $23,660 and $35,508 will no longer meet the “salary test” for exemption from overtime rules and will become eligible for overtime pay.
  • Businesses will need to decide how they want to approach the possibility of additional non-exempt employees in their workforces.

REMEMBER: Salary is just one part of the exemption test.

  • To classify employees as exempt from overtime pay:
    • Employees’ salaries must be at or above the salary threshold AND
    • Employees’ job duties must meet one of the job duties exemption tests, such as the administrative, executive, or professional duties tests.

What do we need to do now?

  • Conduct an audit of current pay practices across your workforce.
  • Determine whether the new rule will potentially reclassify a significant portion of your workforce from exempt to non-exempt.
  • Audit current overtime policies and practices across your business.