SIGNIFICANT UPDATES TO OVERTIME PAY AND EXEMPTIONS
UNDER THE FAIR LABOR STANDARDS ACT
Written by: Attorney Dylan Hall
The main purpose behind the Fair Labor Standards Act is to ensure that certain employees receive sufficient compensation for the work they perform. One mechanism used to achieve this is guaranteed time-and-a-half overtime pay for certain non-salaried employees. However, major changes to the rules and requirements for overtime pay are set take place December 1 of this year, and it is essential that everyone affected understand how they will be impacted.
Currently, all non-exempt employees earning less than $23,660 each year are entitled to time-and-a-half pay for all hours worked in excess of 40 hours per week. However, by the end of this year the requirement for time-and-a-half overtime pay shall apply to all non-exempt employees earning less than $47,476.00 each year. This is a huge change from the current law and is anticipated to provide overtime pay protections to an additional 4.2 million employees, of which at least 330,000 reside in Florida.
Employers will have to choose from several options in order to comply with this updated threshold for each affected non-exempt employee. Some of these options include (1) raising the annual salary to at least $47,476.00; (2) pay an hourly wage with time-and-a-half pay for each hour worked in excess of 40 hours per week; and (3) keep the current sub-$47,476.00 per year salary and also pay overtime for each hour worked in excess of 40 hours per week. Of course, employers are likely to incur additional payroll expenses as a result of these options, and so an expected fourth option taken by employers is to reduce the number of hours permitted to be worked each week primarily by hiring additional part-time workers for the same position.
Another significant change to the Fair Labor Standards Act that will take place on December 1 of this year concerns certain job types that have historically been exempt from the time-and-a-half pay requirement for work in excess of 40 hours per week. The major category of previously-exempt job types that will now also be protected by the overtime pay requirements are white collar positions that include executive, administrative, professional, and computer-professional jobs. The classifications and underlying qualifications for which employees constitute such non-exempt white collar positions are complex and apply on a case-by-case basis, but it is understood that the inclusion of this class of employee will be a significant contributor toward the anticipated expansion of overtime protection for 4.2 million more employees.
There are a few other aspects of the new law that affected employers and employees must be aware of. For one, any overtime pay earned for hours worked in excess of 40 per week must be calculated on week-by-week basis. In other words, overtime pay cannot be based on the average number of hours worked in a month or year, but must be strictly paid out pursuant to each week’s actual hours worked. Second, meeting and training time generally constitutes work that employees must be compensated for, as is work-related travel other than the ordinary commute to and from work. Lastly, the salary threshold for when overtime pay is required that is currently set at $47,476.00 beginning in December 1 of this year will be consistently updated every three years going forward based on calculations involving the standard salary level at the time of each revision.
This broad overview of the major changes being implemented under the Fair Labor Standards Act makes clear the importance for affected employers and employees to understand how this will impact their business and compensation so that compliance can be assured when the new law goes into effect on December 1 of this year. Should you have any questions regarding the Fair Labor Standards Act or any other legal questions whatsoever, please don’t hesitate to call the Law Office of Pamela J. Helton, P.A. at 352-243-9991 to schedule a consultation with one of our attorneys.
- The Florida Bar News, Volume 43, Number 15