Understanding Overtime Salary Cutoff Rules in 2020

If you run a business in Texas and have employees, it is critical to learn more about the new Department of Labor overtime rule that changes the way overtime pay is handled for many employees. The new rule took effect on January 1, 2020, and it remains in effect. What does the new rule do? In short, it changes the salary threshold for overtime pay exemptions. If employees do not meet the salary threshold outlined in the new rule, the employer must classify them as non-exempt and must pay overtime hours for any hours worked beyond the 40-hour workweek. In other words, more employees are now eligible for overtime pay—as many as 1.3 million workers.

Employers need to understand their responsibilities under the overtime threshold rule to ensure that they remain in compliance.

New Salary Threshold for Overtime Pay 

As of January 1, 2020, any employee or worker who earns less than $684 per week, or less than $35,568 on an annual salary basis, cannot be classified as exempt using the so-called white collar exemptions (i.e., the professional, administrative, and executive exemptions). The change in the salary threshold does not affect the job duties requirements of the exemptions.

However, under the new rule, even employees who are executives, professionals, or performing primary job duties that would have previously classified them as exempt are now classified as non-exempt if their pay does not meet the increased salary threshold requirement. Employers need to be aware that non-exempt employees, including those in the previously exempt categories who are no longer exempt due to salary threshold requirements, must be paid overtime pay at one and one-half times the regular rate of pay for hours worked beyond the 40-hour workweek.

How can Texas Employees Manage the Overtime Salary Cutoff Rules?

To classify an employee as exempt, the employer must pay the salary threshold and the employee must meet the duties test. If you have an employee whose work duties place them in one of those exempt categories, but you do not pay the employee enough wages or salary to meet the threshold, these are your options:

  • Increase the employee’s pay to $684 or more per week, or to an annual salary of $35,568 or more per year (keeping the employee’s exempt status); or
  • Begin paying the employee overtime for any hours worked beyond the 40-hour workweek.

To avoid wage and hour claims, you will need to ensure that you are paying exempt employees enough for them to maintain exempt status, or you will need to make immediate plans to pay those employees for overtime hours if they work more than 40 hours in a workweek.

Contact a Texas Employment Law Attorney

Do you have questions about how the 2020 overtime salary rule affects your business? One of the experienced Dallas employment law attorneys at our firm can speak with you today about your business and your responsibilities as an employer. Contact Simon Paschal PLLC today for assistance with wage and hour matters or any other employment or business law concerns.

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