The new year brings new federal regulations for businesses to follow. For the first time since 2004, the threshold for overtime pay eligibility is changing.
The Department of Labor estimates that the new legislation will impact approximately 1.3 million employees. As a result of the income level increase, these 1.3 million workers will be eligible to receive overtime wages in 2020.
Who will the income level increase effect?
Prior to January 1, 2020, employees who performed executive, administrative or professional duties and earned a salary of $23,660 or more, were not entitled to overtime pay.
Now, the threshold has increased to $35,568, which means those who were previously ineligible for overtime pay are newly eligible to receive the benefits.
Remaining in compliance with federal regulations
Salaried employees who earn less than $35,568 per year, perform administrative, executive or professional functions and work over 40 hours in one week must receive compensation on a time-and-a-half basis for the excess hours worked.
What can happen if employers misclassify their employees?
Employers must be extremely cautious when classifying employees. Failure to accurately implement the new regulations could expose businesses to wage-and-hour claims.
Employees can take legal action against their employer, if:
- Their employer failed to pay overtime wages
- Their employer misclassified them as exempt from overtime
- Their employer misclassified them as a contract employee instead of a permanent employee
Conforming to the new salary level increase and properly compensating employees may be the best way to avoid legal violations.