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New FLSA Overtime Exemptions in Effect

The U.S. Department of Labor has released their final FLSA overtime rule and it went into effect January 1, 2020. What does this mean for you? It's time for you to make sure you are aware and complying with this new overtime ruling to avoid repercussions. We will discuss what this ruling means for you and some options for your company going forward.

Change is a must and throughout the years, American workers have seen a great shift in their expected hours and pay for overtime work. Overtime wasn't introduced by the Fair Labor Standards Act until 1938! Before this time, employees were expected to work excessively long hours, for little to no compensation. This was the ultimate debut of the idea of a 40-hour workweek. In 2004, the threshold salary was set to $455 a week. In only 2016, the new standard salary was changed to $913 which was invalidated in 2017, returning the threshold salary to $455. However, in September of 2018, it was announced that they have a new final rule on the subject of overtime pay.

With over 15 years of no withstanding change, it appears the U.S. Department of Labor decided to make a final decision on exemptions. As previously stated, the salary threshold was at $455 a week, or $23,660 annualized and $100,000 a year for highly compensated employees. With the new ruling, the FLSA salary threshold was increased to $684 a week, or $35,568 annualized and to $107,432 for highly compensated employees.

These exemptions allowed for 1.3 million American workers to be eligible for 1.5 times their regular hourly pay for overtime. The FLSA overtime exemptions vary depending on your city and state, so be sure to be aware of what changes have been made in your area in 2020. 

It's crucial to check your budget with this new ruling to ensure that you won't find yourself losing funds. If it appears you can't afford overtime pay, it may be time to reassess your job descriptions and create rules regarding a limit to overtime. If you find it to be more beneficial, you can even raise the salaries of your employees to make them ineligible for the overtime ruling

At Stellaris, we believe that as a business owner or manager, you have the right to explore your options and do what's best for your company. Our goal is to give you the options and let you decide the best course of action for yourself. However, keep in mind that when it comes to Federal or State rulings, the option that is most advantageous to the employee rules, as it doesn't necessarily default to the Federal law.

If you need further direction as to how to proceed, we would be happy to work with you. Contact us for more information!

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