DOL Issues Final Rule on Overtime Pay: How to Determine Eligible Employees and Calculate the Regular RateMarch 9, 2020 8:00 AM
After years of proposed changes to overtime laws, the Department of Labor (DOL)’s new updates finally went into effect at the beginning of 2020. The new salary levels make roughly 1.3 million more workers eligible for overtime pay. This news means business owners across the country may have some work to do to keep up with these changes.
While the new standard salary level is a notable difference, it’s not the only change the DOL made. The department also revised rules for highly-compensated employees, regulations on overtime pay calculations, and other crucial details. To help, we broke down exactly what the DOL changed to help you know where your business stands and what you should do next.
It’s already difficult to manage payroll for a small business, but it can get even trickier if you have employees who work out of state. Whether you have remote employees, live near a border, or have any other reason for an employee to complete their work in a different state, there are certain rules set by the Department of Labor (DOL) and other federal and state agencies that you need to follow when handling payroll for those workers.
With recent changes to the Fair Labor Standards Act (FLSA), many business owners – and their employees – are trying to figure out exactly who qualifies as exempt from overtime pay under the new rules. Unless you’re ready to dig into Department of Labor (DOL) fact sheets and other documents, it’s not always clear just what counts as white collar exemption these days. To help, we’ve put together a breakdown of these exemptions to help you properly classify your employees.
After some big changes in 2019, it’s apparent that New Jersey takes wage theft very seriously. The state adopted the new Wage Theft Act (WTA) and amended its Wage and Hour Law back on Aug. 6, 2019, giving it some some of the toughest laws in the nation regarding wage and hour enforcement.
The new WTA has a direct impact on business owners in New Jersey, but it’s important for those outside the state to be aware of the updates as well. The Garden State is a common testing ground for legislative changes, so other states may adopt similar laws over time. As such, let’s break down exactly what New Jersey’s wage and hour enforcement laws mean for business owners (and what they can do to avoid issues).
The Department of Labor announced a proposal in early March to change the salary-level threshold for white-collar exemptions. This move comes more than two years after a federal judge blocked another attempt to update the threshold for overtime eligibility, although the details of the proposal differ from the 2016 proposal.
The current salary-level threshold for white-collar exemptions is $23,600 annually, which equates to $455 per week. The DoL’s new proposal seeks to increase the threshold to $35,308 annually ($679 per week) – nearly halfway to the DoL’s 2016 target threshold of $47,476 ($913 per week).
While the new proposal is notably lower than the blocked attempt, it still marks a nearly 50 percent increase from the current wage threshold. As a result, the DoL “estimates that 1.1 million currently exempt employees who earn at least $455 per week but less than the proposed standard salary level of $679 per week would, without some intervening action by their employers, become eligible for overtime.” That’s a notable change that can have a direct impact on your employee’s compensation.
Whether you have a single paid employee or run a small business with many employees, you need to pay attention to payroll. However, payroll involves more than cutting a few checks. Good payroll management is comprised of several different functions that help you properly pay your employees and keep your business compliant with government regulations.
Non-compliance can cost businesses a lot of money. If you’ve read our posts before, you’ll know that the benefits of staying compliant are things that we’ve harped on before, but it’s worth repeating, especially when small business owners pay billions of dollars each year in payroll tax penalties. It’s especially true when it comes to something as problematic as multi-state payroll compliance.
The problem with multi-state payroll compliance is that the rules you followed for your home state may not be the same as the other states where you do business. Each state has different payroll standards, meaning that you may not be nearly as compliant as you thought you were.
A federal judge has blocked the upcoming Department of Labor (DOL) overtime rule instituted by the Obama Administration. The rule was set to take effect Dec. 1, 2016, increasing the salary threshold for overtime eligibility from $23,660 to $47,476. This would have made any workers under the threshold eligible for overtime pay for over 40 hours worked per week.
Update: Federal judge blocks overtime rules a week before they take effect. Learn more in our new post.
As a small business owner, it is crucial that you stay current on the latest government regulations affecting your business and employees. Effective Dec. 1, 2016, the salary threshold for overtime eligibility will increase from $23,660 to $47,476. This means that anyone earning a salary under the new threshold will now be eligible for overtime pay for any time worked beyond 40 hours in a week.
The Department of Labor estimates there will be approximately 4.2 million workers affected who will now be eligible for overtime. Business owners must reevaluate their current workforce to meet the new requirements. The Department of Labor will automatically update the salary threshold every 3 years moving forward to match the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region.
A couple of weeks ago, prefaced by an op-ed piece written by President Obama, the Department of Labor issued new directives on overtime rules. As with most government regulations, however good the intention, the result on small business owners will be a creation of “additional costs and record-keeping headaches” according to the National Federation of Independent Business (NFIB).