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FLSA Overtime Update Begins January 2020

October 22, 2019

Last month, the US Department of Labor (DOL) published a final rule that will update overtime law for salary employees in the US, making 1.3 million workers newly eligible for overtime pay. We've been tracking this development since the Obama administration's overtime rule was knocked down by a district judge in 2016. Earlier this year the DOL published a proposed update to the current FLSA wage and hour law, which has now been approved and will go into effect on January 1, 2020. The brief article below explains the changes this will bring for salary employees.

Overtime Final Rule
Under current FLSA law, salaried employees earning over $455/week (or equivalent of $24,660/year) are exempt from overtime benefits for hours worked over 40 in a workweek. Starting January 1, 2020, the overtime rule update will increase this standard salary level for earning overtime benefits to $684/week (or equivalent of $35,568). This means that all salaried employees who currently earn between $455 and $684 in a week will now be eligible to earn overtime pay.

Standard Salary LevelFull-year Salary Level
Current Overtime Law$455/week$23,660/year
New 2020 Overtime Law$684/week$35,686/year

Per the DOL, here are all the changes coming with this update:

  • raising the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
  • revising the special salary levels for workers in U.S. territories and the motion picture industry.

For more information about this ruling, visit the Department of Labor Final Rule Fact Sheet which covers all upcoming changes in detail.

Virtual TimeClock for Employee Time Tracking
If this update to the federal overtime law means that you will need to track employee time more closely, it may be time to update your time clock solution. Virtual TimeClock is powerful, easy-to-use desktop time tracking software for your Mac and Windows computers.

Virtual TimeClock is available as a one-time cost which can save you hundreds or thousands of dollars a year compared to a subscription-based time clock service in the cloud. Find out more by visiting the TimeClock Overview page or reaching out to our US-based customer service team. We're here to help!

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