You are probably aware by now the new proposed overtime rule has been released by the Department of Labor. Though the new provisions don’t go into effect until January, 2020, the overtime threshold will be raised to $35,308 ($679 a week) from $23,660 ($455 a week) per year.
What this means for the employer is that any current salary exempted employee not making at least $35,308 will be reclassified as non-exempt. The employee will not have the opportunity for overtime pay above 40 hours in a workweek.
Employers will need to determine if it makes sense to increase an employee’s salary to the threshold versus paying the employee at their current wage and hope that the employee doesn’t need to work beyond 40 hours as a reclassified non-exempt employee and end up paying higher than the $35,308 threshold.
Other potential issues when reclassifying an exempt employee to non-exempt include tracking hours and calculating overtime wages, the employee seeing the change as a demotion, and more awareness on the employees’ part of wondering what positions are exempt and non-exempt.
At this time, the proposed overtime rule is just proposed. Most employers already went through the process of determining position classifications when the original proposed changes came out in 2016, so it shouldn’t take a significant amount of time and effort to meet the new changes set for January, 2020.