Overtime pay for Salaried Employees: The Rules have changed
The Fair Labor Standards Act (FLSA) is a federal law which protects workers through overtime pay requirements. The FLSA is enforced through the U.S. Department of Labor Wage and Hour Division (USDOL). USDOL published an updated rule on July 1, 2024 that defines when certain salaried employees are entitled to overtime compensation. The rule is found in 29 C.F.R. Part 541. This rule extends the right to overtime pay to millions of salaried employees across the country.
Employers often think of their employees as falling into one of two categories: (1) hourly workers, for which hours worked are tracked and overtime pay is a well-known requirement; and (2) salaried workers, where hours worked are not typically tracked and the workers are thought to be “exempt” from overtime pay requirements. Employers cannot assume that overtime pay is not required for salaried employees. If you fail to pay overtime to employees who are entitled to it, the USDOL can take enforcement action against you or a private suit may be filed to recover overtime pay for two years. The employer may also be subject to liquidated damages, which doubles any overtime compensation due. Current USDOL policy regarding liquidated damages gives regional officers considerable flexibility in deciding to assess liquidated damages, increasing the financial risk to employers.
The updated rule defines when overtime pay is required for employees in executive, administrative, professional, and other roles. It also defines salary thresholds to determine when an employee is “exempt”, or “highly compensated”, and therefore not entitled to overtime pay. Administrative employees are those whose primary duty is to perform office or non-manual tasks directly related to management or general business operations at the employer or the employer’s clients. They also have to exercise discretion and independent judgement in matters of importance. Have questions about this rule and how it applies to your business or organization? Law 4 Small Business (L4SB) can provide answers. A Slingshot Company. A little law can save you a lot of money later.
