Roedel Parsons Koch Blache Balhoff & McCollister

Employers Take Heed: 1.2 Million New Workers Eligible for Overtime Pay Under New Overtime Rule

This week, the Department of Labor announced a final rule to make 1.3 million American workers eligible for overtime pay.1 Under the new rule, most salaried workers who earn less than about $35,500 per year will be eligible for time-and-a-half overtime pay, up from the current threshold of about $23,700.2 The rule raises the "standard salary level" from the currently enforced level of $455 per week to $684 per week (which equates to $35,568 per year for full-year workers). Some employees, such as business owners, doctors, lawyers, teachers, and outside sales employees, are not affected by the new rule. 

Far from the $47,500 threshold pushed by the Obama administration, the new $35,568 threshold will still complicate matters for business owners who have employees that make below the new salary level. The Department of Labor estimates that in 2020, 1.2 million currently exempt employees who earn at least $455 per week but less than the standard salary level of $684 per week will, without some intervening action by their employers, gain overtime eligibility.

Is this a big issue? It's bigger than you might imagine. Take, for example, the recent news regarding a restaurant in New Orleans that was ordered to pay $238,000 to employees by the U.S. Department of Labor for a violation of the current overtime rule.3 The new rule will expand the number of employees entitled to overtime pay.

So what should Louisiana employers do? A few things. According to the Society for Human Resource Management, employers should evaluate potentially affected workers and take the time to review workers' job duties to ensure they satisfy the applicable exemption's criteria.4 Employers should also review exempt positions that are currently paid below $684 per week and formulate a strategy to comply with the new overtime regulations.5 Employers should be especially cognizant that overtime violations could result in employee lawsuits, backpay, and penalties. For an assessment of how your company could be impacted by the new overtime rule, contact an experienced labor and employment attorney.

The rule goes into effect on January 1, 2020.


1 See Press Release, Wage and Hour Division of U.S. Department of Labor, U.S. Department of Labor Issues Final Overtime Rule (Sept. 24, 2019), https://www.dol.gov/newsroom/releases/whd/whd20190924.

2 Noam Scheiber, Overtime Pay Eligibility Is Widened in New Federal Rule, N.Y. Times (Sept. 24, 2019), https://www.nytimes.com/2019/09/24/business/economy/overtime-pay-rule-trump-administration.html.

3 See New Orleans City Business article, dated October 3, 2019, at:
https://neworleanscitybusiness.com/blog/2019/10/03/popular-new-orleans-eatery-fined-238k-over-unpaid-overtime/?utm_term=Popular%20New%20Orleans%20eatery%20fined%20%24238K%20over%20unpaid%20overtime&utm_campaign=Popular%20New%20Orleans%20eatery%20fined%20%24238K%20over%20unpaid%20overtime&utm_content=email&utm_source=Act-On+Software&utm_medium=email

4 Lisa Nagele-Piazza, Employers Should Plan Now for New Federal Overtime Rule, SHRM (Aug. 30, 2019), https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/employers-should-plan-now-for-new-federal-overtime-rule.aspx.

5 Id. See also, the U.S. Department of Labor Fact Sheet #17A: https://www.dol.gov/whd/overtime/fs17a_overview.pdf.

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