On September 24, the federal Department of Labor issued its final rule on the overtime rate. The new rate becomes effective on January 1, 2020.
Under the new rule, non-exempt employees who earn less than $35,568/year are now eligible for overtime pay. This change raises the salary threshold from its current rate of $455/week ($23,660/year) to $684/week ($35,568/year). Unlike the prior proposed rule under the Obama Administration, this rule does not include automatic adjustments to the threshold. The rule also raises the threshold for highly compensated employees from $100,000/year to $107,432/year, of which $684 must be paid weekly on a salary or fee basis. The new rule does not alter the job duties tests, which determine whether an employee’s work duties qualify for the white collar exemptions.
Maine’s current salary threshold for exemption from overtime requirements is $33,000. As of January 1, 2020, when the federal rule becomes applicable, the Maine threshold will increase to $36,000, which is higher than the new federal level. Therefore, the change should have minimal, if any, effect on current exempt employees in Maine from the salary basis perspective. Nevertheless, employers should review the salary level for exempt employees to ensure they still qualify and, if not, determine whether to restructure the position to reclassify it as nonexempt or institute a salary change to reach the threshold.
More details regarding the specifics of this change, as well as other employment law updates, will be discussed during Rudman Winchell’s Annual Employment Seminar scheduled for October 24. If you have not already registered and would like to do so, please do so at www.rudmanwinchell.com/events or call 992-2302.