Work-Life Referral Program

Proposed Overtime Rule Expected in October

By: Sara Choate, SPHR, SHRM-SCP

If given the opportunity to choose between being proactive or reactive, most people elect a proactive approach. We like feeling prepared and having a plan in place for what could be coming around the corner generally serves us well. The Department of Labor’s (DOL) Wage and Hour Division (WHD) has handed us an opportunity to do just that, and while there are many unknowns, now is the time to prepare for what might be coming.

It’s widely believed these proposed changes will include an update to the salary level requirement exemption. So, what exactly does that mean? Since January 1, 2020, the minimum salary level required for an exempt employee has been $35,568 annually. Meaning, if you are paying an employee a salary, they can make no less than $684 per week. Many believe the DOL is on the cusp of proposing an increase to that amount that may push it closer to the mid-$40,000 range.

Items to consider:

  • Do they truly meet wage and hour criteria for being exempt? Remember, job titles do not determine exempt status. For an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the DOL’s regulations. This DOL fact sheet provides more information regarding the types of exemptions and the tests each must meet.
  • If you are confident the position meets current guidelines, consider your options, which may include:
    • Raise their salary and keep the employee exempt from overtime.
    • Converting their pay to hourly. Even if the exemption test is met, you can always pay on an hourly basis, which also means you’ll be tracking their time and paying overtime when applicable.
    • Keep them salaried and pay overtime when required.

In addition, it’s commonly believed modifications may be coming to the duties test – an area that unlike the salary threshold – hasn’t been altered in many years. While it’s too soon to say what’s being proposed, it’s an area KPM Human Capital Solutions will keep close tabs on and keep you informed as changes are recommended. For more information or a consultation on this proposed ruling or other relevant HR topics, contact Managing Director Sara Choate, SPHR, SHRM-SCP at [email protected] or 417-882-4300.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.