Proposed changes to overtime regulations are set to take effect in January 2020, pending public comment. Here’s what’s new right now:
This month, the U.S. Department of Labor (DOL) proposed modifying the overtime regulations under the Fair Labor Standards Act (FLSA) in several important respects, specifically:
- It would reset the salary level necessary to qualify for certain exemptions from overtime to $35,308.00 (or $679 per week) – up significantly from the current level of $455 per week. But, employers would be allowed to apply non-discretionary bonuses and certain incentive payments to satisfy up to 10 percent of the salary level test.
- It would reset the salary test for the Highly Compensated Employee (HCE) exemption to $147,174 – also up significantly from the current $100,000 requirement.
Significantly, the proposed rule would not change the duties requirements for any overtime exemptions, nor would it impose any automatic increases on the salary tests.
Why Does it Matter To Illinois Employers?
The proposed rule, if it takes effect, is expected to make millions of existing workers eligible for overtime. Failure to pay overtime to workers can result in substantial penalties and backpay liabilities and invite class action lawsuits.
Should You Do Anything Now?
Employers who currently have exempt white collar workers who earn less than $679 per week should start considering the changes they’ll need to make to remain compliant with the FLSA. Changes to consider may include increasing salaries to the new level, reclassifying employees as non-exempt and/or rescheduling work to prevent employees from working overtime.
Employers should also evaluate how the new rules will interact with state and local overtime laws, which overlap with, and may vary from, the DOL’s requirements.
This story is part of an ongoing series highlighting legal changes that Illinois employers must know now. We’ll keep you posted on newly introduced laws as they’re debated and enacted.
Gary Savine is an Illinois employment lawyer and founder of Savine Employment Law, Ltd. in Chicago. Gary regularly advises businesses on recently enacted employment laws and performs employment compliance audits and investigations for employers.