Under the Department of Labor’s new overtime rules, which become effective January 1, 2020, all employees with a salary of less than $35,568 must be treated as hourly employees entitled to overtime compensation whenever they work more than 40 hours in any given workweek. That equates to a weekly salary of $684. Under the old rules, the threshold was $23,660 (or $455 per week). Under the new rules, up to 10% of the $35,568 salary may consist of commissions or nondiscretionary bonuses.
Employers should understand that just because an employee makes $35,568 or more does not mean that the employee is automatically a salaried, exempt employee. In most cases, to truly be exempt, in addition to meeting the salary threshold test, an employee must also satisfy two criteria:
- The DOL’s so-called salary basis test (or no docking rules)
- The employee must occupy a “white collar” (executive, administrative, or professional) position
The new rules also tweak the highly compensated employee test, raising the threshold salary from $100,000 to $107,432.