The Department of Labor regulations regarding millions of salaried employees who are currently “exempt” from the overtime pay rule of the Fair Labor Standards Act (FLSA) are as follows:
Criteria to Be Considered Exempt From Overtime
To qualify for exemption from the FLSA’s overtime requirements, an employee must be paid a minimum salary level (in 2020, $684 per week/$35,568 per year)AND perform the appropriate exempt duties. To satisfy the exempt duties test, work must be:
- Executive – Primary duty is management of two or more full-time employees.
- Administrative – Primary duty is office or non-manual work related to business operation.
- Professional – Primary duty is performance of work requiring advanced knowledge.
- Computer Related – Primary duty is computer or program design.
- Outside Sales – Primary duty is selling products or services at the customer’s place of business or home.
- Increase the salary of an exempt, salaried employee to the new salary level to avoid overtime pay
- Pay overtime as needed
- Reduce or eliminate hours worked over 40 in a week
- Reduce pay and give more hours so salary remains constant
- Some combination of the above.
Tips for Employers
- If you have salaried employees who will be eligible for overtime, you can keep them on a salary and still pay them overtime for hours over 40 in a week
- Compensatory time cannot be used instead of overtime pay if the employee is otherwise eligible for overtime
- For overtime eligible employees, the employer will have to keep track of daily hours worked.
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