The Labor Department is expanding the group of workers eligible for overtime pay. This expansion is estimated to include about 1.3 million workers. Starting January 1, 2020, the minimum yearly salary threshold will be raised from $23,660 to $35,568. Thus, any employee who makes $35,568 or less per year (or $684 per week) will be eligible for time-and-a-half pay if he or she works more than 40 hours per week.

Some states have already adopted new overtime rules that set salary thresholds to around $50,000 (including New York and California). But if you are an employer in other states, this federal rule will apply to you if you do not already pay your workers overtime at this threshold.

The new rule’s background

An Obama-era version of this law, set to go into effect in 2016, was delayed by a court after states and business challenged it. This version would have increased the threshold to about $47,000, covering an additional 3 million workers. The Labor Department declared it would issue a watered-down rule in 2017, issuing the final version in September 2019. Critics see the final rule as a step backwards from the Obama-era rule, arguing that the rule is unfair to workers because it is not indexed to the changes in the cost-of-living. Others view it as a modest approach, keeping doors open for employers who may have been put out of business under the Obama Administration’s version.

Contact NDS today for help in answering any questions you may have or understanding how this new rule impacts your business.