the new overtime pay law is here (for real this time)

by Alison Green on September 24, 2019

The U.S. Department of Labor issued a final ruling today on the question of what salary level should make workers exempt from overtime pay, and here it is: If you earn less than $35,568, then starting on January 1, 2020 you must be paid overtime (time and a half) when you work more than 40 hours in a week.

There’s a bunch of history that brought us here: In 2016, the federal government announced it was making major changes to who is eligible for overtime pay and raising that threshold to $47,476, which would have made an additional 4.2 million American workers eligible for overtime. That was a huge change, and companies were scrambling to adjust, many of them raising workers’ salaries to get them over that threshold. Then, the day before the new rule was scheduled to take effect, a judge issued an injunction halting the rule nationwide. But this new ruling today appears to be for real (it’s possible a judge could again halt it, but that’s unlikely as the increase is much smaller).

To understand all this, you need to know that the federal government divides all workers into two categories: exempt workers, who are not required to receive overtime pay, and nonexempt workers, who must receive overtime pay. The exempt category is currently  reserved for employees who perform relatively high-level executive or professional work, outside sales employees and a few other narrowly defined categories. To be considered exempt, you have to meet that duties test and also earn at least $23,660 – but the new law raises that to $35,568.

If you’re in the group affected — people who currently earn between $23,660 and $35,567 a year — your employer might increase your salary to the new threshold of $35,568 in order to keep you exempt and avoid having to pay you overtime. This is the most likely option if you’re already very close to the new salary threshold. Or, your employer might prohibit you from working over 40 hours in a week or require you to get advance approval for any overtime. They might even reduce your base hourly wage in order to account for the overtime pay you’ll receive, thus keeping your overall annual compensation the same. Or they might change nothing and just need to pay you overtime.

If you’re in the group of people affected by this, it might also change how much flexibility your employer offers you. For example, if you’re currently able to work 35 hours this week when work is slow and work 50 hours next week when demands are higher, you might not be allowed to do that anymore, since your employer will have to pay overtime for those extra 10 hours the second week.

Two other interesting pieces of the final ruling:

  • Right now, if you don’t meet the duties test to be exempt but you earn at least $100,000 a year, you’re in a class called “highly compensated employees” and can be exempt from overtime pay. The new rule increases that minimum salary requirement to $107,432 per year.
  • Non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually can be used to satisfy up to 10% of the minimum salary requirement.
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  1. Countess Boochie Flagrante*

    That still seems like an awfully low bar, but at least it’s better than the $23k threshold. I wonder how they settle on these odd numbers?

      1. Antilles*

        FYI, if you look at the historical wages and adjust for inflation, $50k is actually pretty much right where it should be – the listed value in 1975 was about $8k, which would be about $50k today if it had been inflation-protected (h/t to Vox for doing the math).

        1. Wintermute*

          If you go back to the beginning of the proposals and calculate for inflation it ought to be about twice that, which sounds more reasonable to me.

        1. Door Guy*

          I remember in 2016 when this was originally going to happen. At the time, I made $41,600 as the lowest level manager they had. We all got an email on Wednesday saying that to comply with the new law, we’d be getting pay increases to get us over the new minimum effective the current pay period. Needless to say I was ecstatic.

          The next day we got an email saying that a court in (I believe Texas) had blocked it and to disregard previous email.

          The President of the company did acknowledge that it was a jerk move and gave us all a raise (less than 1/2 of what was originally stated) at the beginning of 2017 but it still didn’t take the sting out of it. When I left in 2019 I still wasn’t up to where I would have been if we had gotten those originally stated increases.

        2. Rachel Morgan*

          Except sometimes they are. Library director I knew was paid 34500. I’m a library director, not paid 50k. Definitely management.

    2. Silver Radicand*

      I totally agree on it still being really low. $32k is still only $16/hr!
      But I believe the numbers tend to come from matching the increases to inflation. Now granted the $45k number seems a lot closer to where it should be if inflation was the sole measure, but I’m guessing they modified that to get it passed.
      Actually, given the weird numbers I see on tax forms each year, I’m actually more surprised that the “well-compensated employee” line was at a round $100k.

      1. Silver Radicand*

        Wow, somehow I managed to get the number wrong even with it being written like three times up there…*sigh* still way low.

      2. The Man, Becky Lynch*

        Yeah I flinched at this number because 23 is so yuck but our minimum wage here is $16 an hour for entities with 500 employees or more and 15 for under that. So it’s like “Oh jeez, okay so this is barely above minimum wage but cool…story.”

        I know it’ll at least help out some of those folks in those low AF paying areas but I also know places will just start cutting hours and employees if they really wanna mess around. Just argh, I hate this whole thing and the dissatisfaction of it all.

        1. Silver Radicand*

          So I saw AnotherAlison’s comment below about percentiles, and it reminded me that they chose these numbers based on the 40th percentile of wages. After some checking, it turns out that the reason the number went down so much is that they are now using the 40th percentile of the lowest wage census region instead of the 40th percentile of the nation.

          Apparently, there were comments that “expressed concern about the impact on certain industries in certain regions.”

          1. AnotherAlison*

            Wow, that’s nice. All I know is my single-income household in 1999 made about $30-35,000 in LFK, and we lived in a 2 BR duplex with $450 rent and could buy groceries for 3 for $40/wk and were still poor. 20 years ago! It’s pretty unfair to take that wage from the lowest wage parts of the country and apply it nationally. I say that while being much more politically right than most here. It’s nice to have ideologies, but people need shelter and food. I don’t want to be insulting, but $35k per year doesn’t seem like it really affords a middle class lifestyle, but I also think my ideas of middle class lifestyle may be skewed at this stage in my life.

            1. The Man, Becky Lynch*

              Yeaaaaaah and in the highest minimum wage paying city in the US right now, the minimum wage is 33k. And a room. A room, not an apartment costs about $800 a month and that may or may not include utilities and such.

              1. MsChanandlerBong*

                I paid $610 a month back in 2005 to rent the upstairs of a family’s house in Northern NJ (I worked in NYC). I had a bedroom and a bathroom. No kitchen, no hot plate allowed. Had to eat all my meals at work/order in, as I couldn’t cook anything. At $12 an hour (to be an administrative assistant at a real-estate company), it was all I could afford! My rent took up almost one entire check ($784 after taxes), and then I had to use the other check for food, subway fare, NJ Transit fare, and so forth.

                1. The Man, Becky Lynch*

                  This sounds like utter hell and I have so many feels about how horribly y’all are paid out east. I know I heard back then when my friends were in college in NYC about their tiny packed apartments that cost that them upwards of a thousand dollars to live in a frigging literal closet “it’s a room!” “no gurl, that’s a literal closet, there’s no window that’s not legally a room but college…”

                  I paid $600 for a two bedroom townhouse 3 years ago but I was making more than enough for it since I was working 3 jobs and had one with over the top commissions on materials that I hustled on the side. Meanwhile my friends in Portland couldn’t find a house to rent for under 3k a month. The variable cost of living blows my poor math loving mind.

                  I live a blessed life where I have always lived at home with my parents or made enough to have a place to myself, without living in a closet. Granted my studio is less than 400sq ft, I’ve had larger hotel rooms.

          2. The Man, Becky Lynch*

            Boohoo industries that can’t catch up. There are always excuses. Nobody is going to out of business that wasn’t on it’s way out. I hate this line of thinking [general rant, I know you’re not one of them and are just the messenger.]

            I just noticed the “difference” in prices in fast food prices between Seattle [16 an hour] and outside [12 an hour], it’s less than 50c usually. *stabbing motions* Oh noes, won’t someone think about the poor businesses, crocodile tears in my eyeballs for them.

            1. Kathlynn (Canada)*

              This exactly. In the last 11 years min. wage in my province has gone up around $4.5/hour. the prices haven’t gone up that much, not any that can clearly be laid at the feet of wage increases. Taxes and tariffs, yes. Other price changes were discounts that really were too generous, or other small increases (like 10c here or there, which does add up. But right now, I’m making the same at 32hr/week as I did a year or two ago at 40hr/week. more then I did when I first got a full time job.).

              1. The Man, Becky Lynch*

                Throwback to Papa Racist John being all “I couldn’t POSSIBLY offer health insurance to my employees!!!!!!! I WOULD HAVE TO RAISE MY [mediocre AF] PIZZA’S 25c EACH! CUSTOMERS WONT BE HAPPY!”

                Well gurl, I buy pizza when I feel like it and I’m not even mad that I have to pay $25 instead of the $23 I paid when I was in a lower cost of living area.

                One of our Subways actually doesn’t accept coupons because “Oh noes the higher costs here!” no dude, your jacked prices cover that, you’re still pulling in the same margins, cry me a river while I go to the other one five blocks away that accepts my free-cookie coupon!

    3. LT*

      The appropriateness of the number changes depending on where you live. It’s too bad they couldn’t adjust for locale.

      1. Starbuck*

        Couldn’t states legislate their own salary thresholds above the federal minimum, just like they do with minimum wage? Looks like at least Colorado is doing that (or trying to).

          1. Is it Friday yet?*

            Yep, it pretty much mandates that you can only be exempt if you make ~2x the minimum wage. Right now, we have variable minimum wages. It’s $15/hr in NYC for companies with >10 workers, $13.50 for companies with <10 workers. For the former, you can only be exempt if you make 75x$15 per week. Which is a little over $58k per year.

            Minimum wage is currently slightly less in downstate outside the city (Westchester & LI) and slightly less than that upstate, with similar differentials based on employer size. (Upstate is around $11 right now). (Eventually they will all hit $15/hr at which point let's hope the NYC (at least) wage rises above that.) In any case, the formula for exempt employees is 75Xapplicable minimum wage in the whole state. It's not a bad system.

      2. Wintermute*

        They could, of course, they simply won’t. I mean that’s just a technological or implementation detail, the language of the bill could easily have said “employees earning less than 110% of the median income for the zip code in which their place of actual employment (as defined by the government’s boilerplate definition of ‘place of work, which is usually the location to which you report on a daily basis, or your home address for remote workers) is located…” They just didn’t do that.

    4. Starbuck*

      I wish it was higher too, but this would still be a substantial raise for me (almost 10%) and since I almost always work more than 40/week I’d like to get paid for that time, either way. My org (a small non-profit) had made some vague comments about how the previous rule change might have affected us, but never settled on a specific plan and so no one got proactive raises or re-classifications. I hope this rule sticks this time.

      I wonder if orgs will bother to plan ahead this time – last time it was reversed, but it was a big change so that can’t have been too great a surprise. This time the change is much smaller, so maybe people will assume it’s more likely to go into affect unchallenged? That’s my hope at this point but I don’t exactly have my finger on the pulse here.

      1. Oh No She Di'int*

        Frankly, I am surprised your organization did not prepare for this last time. We did (a small, private business of 8 employees) because after all the rule was scheduled to go into effect the following day.

        I imagine there will be a lot less scrambling this time around because I’m sure many business did what we did: made the appropriate adjustments based on the higher $47,476 figure. Even though that rule didn’t go into effect, we left all the adjustments in place because going backward would have caused even more turmoil. So any adjustment that is less than $47,476 doesn’t affect us.

        1. Starbuck*

          Of course it’s possible that the board and/or ED had made some more specific plans, but just hadn’t communicated them to the rest of staff. I’d forgotten how close to the wire the reversal was, so it seems more likely I just wasn’t aware.

        2. That Girl from Quinn's House*

          The large non profit I used to work for spent a lot of time preparing for the 47k upgrade…by writing and submitting an eleven page long white paper to the DoL, saying that switching low paid staff to hourly would “damage their self esteem” among other things.

          1. Oh No She Di'int*

            This seems odd, right? But based on my experience, this is not really as outrageous as it looks. I don’t know if I’d go so far as to say “damage their self esteem”–that sounds deep and permanent. But it is true that lower-level salaried employees where I work certainly winced at the notion of becoming hourly employees.

            Many employees experience a real and palpable sense of accomplishment at becoming a salaried employee. For many it marks a transition from being something like a barista or a cashier to a “real” professional. Also, as has been stated in other posts, people like the idea of being salaried because it implies a certain amount of freedom, an ability to come and go as you please within reason. It’s a symbol that your employer trusts you enough not to track every minute of your day. Losing that feels like a demotion to many people.

            Obviously this is not true for every single human being in the workforce. You will undoubtedly be able to point to a counter-example. I’m just reporting what seemed to be a general trend where I work and in many other professional environments.

          2. vlookup*

            My first job was at a nonprofit like this. Personally, what really damaged my self-esteem was doing the math and realizing that some weeks I was making the equivalent of <$6/hour, at a demanding job that required a college degree…

      2. Lilith*

        Thank you, Starbuck, I’ve always been mystified about the geography/$$ of pay scales. It’s never made sense to me.

    5. MassMatt*

      The tax code is riddled with odd figures like this. One explanation i’ve heard often is these things are done by a committee, one side wants age 59, the other wants age 60, so we get a retirement age of 59 1/2. The other explanation is that it is designed to increase complexity, and thereby perpetuate the jobs of tax attorneys and accountants.

      Who can say which passes the test of Occam’s Razor as the simpler explanation?

    6. Zip Silver*

      $35k goes a lot further in Texas and Georgia than it does in California and New York. Just like the $15 minimum wage movement, you can’t take the cost of living in the most expensive parts of a 300,000,000 person county and then extrapolate that to everybody.

        1. The Man, Becky Lynch*

          Rural Washington, Oregon and even California also could get by with 35k a year too. Cities are always higher cost of living for the most part, regardless of the state. You pay for the convenience of living in a rat race!

          This is why in Oregon they have minimum wage due to population of the regions not just a flat state wide minimum.

          1. Door Guy*

            I live in rural Minnesota. Per an article I saw in the Star Tribune (the Minneapolis/St. Paul newspaper) my mortgage w/escrow is less than a roach infested efficiency apartment in a bad neighborhood in the metro area.

          2. J.E.*

            My state is known for having a low cost of living where you can get a nice size home for less than a closet in other places, but our minimum wage is $7.25/hour and hasn’t changed in years. A single person could do ok on $35K a year here if they budgeted, but that’s getting harder every year as prices go up, but wages stay the same.

      2. fhqwhgads*

        True, but apparently what they’ve done is take the cost of living in the least expensive parts of the country and then extrapolate that to everybody so…

        1. Zip Silver*

          Of course they did, that’s the point of setting minimums. One has to account for the lowest cost of living areas when seeing a minimum, and leave the more expensive areas free to go further if they need to.

          2. Gazebo Slayer*

            But trusting the more expensive areas to “go further if they need to” hurts a lot of people who live there, because often the more expensive areas WON’T “go further if they need to. Even if they do, that “going further” takes years of advocacy and legislation and waiting for laws to come into effect.

  2. 1234*

    I clicked through the links and didn’t find any info on this: Is there a minimum number of employees that a company needs to have in order for them to be required to follow this law? Just curious to see how this impacts small businesses.

    3. Wintermute*

      It’s anyone covered by the Fair Labor Standards Act, so the minimum number of employees is two including any owners, so if you own your own business and have no employees you don’t have to pay yourself overtime, other than that it’s based on a two-pronged test.
      Basically you’re exempt from federal rules if you are out of federal jurisdiction, meaning you perform absolutely nothing interstate (not even phone calls to someone outside the state) on a regular basis. Even mopping the floor in a building that makes parts which will be used in items shipped interstate is considered jurisdiction. But even if you personally aren’t in federal jurisdiction your company is if they have more than half a million dollars in total gross business/sales, are a hospital/healthcare facility/nursing home/school/preschool, or are a government agency of any form (state or federal).

  3. Only the Lonely*

    This is part of the Fair Labor Standards Act (FLSA), which applies to nearly every employer (and employee) in the county.

      1. Wintermute*

        individual jurisdiction would be attached to anyone that regularly interacts across state lines, but other than that you’re right.

      3. Anony pony*

        That answers a question I had.

        Our company pays out every other week and has always done “80 hours per pay period” with flexibility in that pay period and we LIKE it.. it allows us to have that so called “Life/Work Balance”. I don’t want to lose that as I take advantage of that frequently due to health issues & doctor appointments.

        Since we’re a non-profit that does not do business out of the state, it looks like they won’t have to change this?

        1. Ask a Manager* Post author

          It depends. Nonprofits are also covered by this law if they have $500,000+/year in business revenue. (Apologies for forgetting to note that above.)

          However, even if your organization isn’t covered under that provision, individual employees at nonprofits are covered under the law if they engage in interstate commerce in the course of their work (including making out-of-state phone calls; receiving or sending interstate mail or email; ordering or receiving goods from an out-of-state supplier; and handling credit card transactions or performing the accounting or bookkeeping for such activities). That phone call and email part covers nearly everyone.

          1. Anony pony*

            Our home office may do those things (the calls/emails/suppliers out of state) but us worker bees do not, we work directly with citizens in our state only and no money ever changes hands.

        2. Only the Lonely*

          “Interstate commerce” can mean sending mail out of the state and all other sorts of very broad stuff. Pretty much every org. is covered by FLSA. If you have to abide by minimum wage requirements and all that standard FLSA stuff, you have to abide by this.

    1. Silver Radicand*

      Unfortunately, it does not. Per Fact sheet 17D, “The salary and salary basis requirements do not apply to bona
      fide teachers. “

      1. Gazebo Slayer*

        Ugh. That is obscene. And rooted in sexism, considering that it has long been a female-dominated profession.

    3. Alli525*

      The fact that this law could apply to teachers – that teachers could be anywhere NEAR that $35k threshold – makes me incredibly sad. But I bet your union (I so hope you have one) would have some good, specific guidance, if Alison doesn’t.

      1. HS Teacher*

        I made $33,000 my first year of teaching, which was four years ago. Thanks to the Red for Ed movement and a district that gives any extra funding we do get to classified/certified wages, I make almost $20K more than that now.

        But I have friends in other areas who are still making around that $35K mark. For a job that requires a degree and usually an advanced degree as well, it’s ridiculous.

      2. TheBurg*

        I work at a private school teaching kindergarten and make Way Less than this, hovering very close to that 23k mark.

      3. The Man, Becky Lynch*

        Teaching has always been such a thankless position with pitiful salaries throughout history and it angers me.

        The unions can only do so much, you can’t bleed a turnip. The first thing cut to “save tax money” aka reallocate it to defense fund is to take it from the schools.

  5. BigLo*

    One recommendation I would also make if you’re being switched from exempt to nonexempt as a result of this is to make sure that your hourly wage computes to the same (or not less) as your exempt salary if you don’t often work overtime. A few people I know would’ve been affected by the $47k change in 2016 and their employer switched their position to an hourly wage that computed annually to less than their salary based on a misunderstanding of how many hours were expected in a week (35? 37.5? 40?). One of my friends had to increase her hours to make up for the reduction.

    1. Bridget*

      Yep, I had a friend who was making maybe $41-42k and they made her hourly, and in order to get her previous salary she had to work 50 hours a week.

  6. AnotherAlison*

    Huh. This is one of those posts where I go down the rabbit hole of looking at income brackets <$35k is a little under the 50th percentile and $107k is just under the 10th percentile. Then I look at my household income and wonder WTF all our money goes.

    2. Dagny*

      Those percentiles include graduate students, the elderly, stay at home moms who work mother’s hours or have a ‘side hustle,’ etc. The average full-time worker makes $47,060 a year, according to BLS.

      1. Devil Fish*

        So $47k is the average if we take out all the data that would lower that average? Neat fun fact but I don’t see how it’s relevant when huge segments of the economy rely on part time workers to function within the current system by denying benefits to save on costs (retail, food service, etc).

        PSA: A lot of working class people work multiple part time jobs and put in a hell of a lot more than 40 hours a week for significantly less than $47k (also no benefits, fun!). I’ve personally never topped $32k—by taking a lot of 50-hour weeks at a call center, so it was mercifully only the one schedule instead of 3 or more. Exhausting.

  7. lilsheba*

    so if I make something over $37000 a year does that make me salary now instead of hourly? I’m confused because my workplace is a very hourly setup.

    1. Starbuck*

      Doesn’t sound like you would be impacted at all if you are already hourly. If your position qualified as exempt, your employer could have already had you working at that yearly rate (or much less!) with no overtime pay.

    2. Narise*

      You don’t have to be moved to salary. But they cannot pay you base salary less than 35568 and not pay overtime. Your job duties may not allow you to be salary so it’s unlikely they will change your salary or your status from hourly to salary. To be salary usually you have to oversee the equivalent of 2 full time employees, exercise discretion in your work, and have hiring and firing capabilities or at least your opinion is given significant weight. There are other exempt classifications for computer professionals, sales, executive, and professionals in academia or those that are creative such as actors but falls along these same parameters.
      If your employee has to move others to a higher salary rate or move employees to hourly you may see overtime reduced but I don’t believe you will be impacted.

      1. Fortitude Jones*

        To be salary usually you have to oversee the equivalent of 2 full time employees, exercise discretion in your work, and have hiring and firing capabilities or at least your opinion is given significant weight.

        That should have said “and/or have hiring and firing capabilities” – I’ve been salaried exempt for five years and have never managed anyone. I do, however, make high-level decisions and in my current position, engage in departmental strategic planning.

        1. Narise*

          That’s why I added the information about their being other classifications regarding salary exempt. Generally exempt status follows the job duties test but there are exceptions.

      2. Melissa*

        > To be salary usually you have to oversee the equivalent of 2 full time employees, exercise discretion in your work, and have hiring and firing capabilities or at least your opinion is given significant weight.

        People confuse these terms all the time, so just to be clear it’s the exempt or nonexempt status that is determined by a salary test and a duties test. Employees can be salaried nonexempt, meaning the employer pays a set (base or salary) amount per pay period, but still tracks hours worked and pays overtime for weekly time above 40 hours.

      3. MCMonkeyBean*

        ????

        I have been a salaried employee since I started my career as an entry-level employee. I have never overseen anyone and honestly hope to never do so. I have never heard of those two things being connected.

        1. MCMonkeyBean*

          I saw similar comments below so I looked at this link:
          https://www.flsa.com/coverage.html

          I’m still a bit confused but it looks like there are three “exempt” categories and the management thing is just in one of them (the “executive” category). As an accountant I fall into the “professional” category and it looks like there is also an “administrative” category.

          Now I’m curious as to whether all the job postings that require a college degree do so to make sure they can pay them as exempt because of this part “Professionally exempt workers must have education beyond high school, and usually beyond college…”

    3. TiffanyAching*

      Employers are allowed to have employees be hourly/pay them overtime even if they meet the criteria to be exempt; it’s just that if you *don’t* meet the duties and salary test, or one of the other exemptions, they you *have* to be paid overtime. For example, my husband makes about $50k/year and easily meets the duties test, but he’s still hourly and paid overtime.

      Your employer may decide that, if you meet the duties test, they are going to have you be exempt and convert you to a salary. Or, they could decide to keep things as they are and still pay you per hour.

    4. Overeducated*

      Nope. My HR paperwork lists me as “FLSA exempt” as a salaried professional worker, but I am treated as hourly in terms of payroll, leave, overtime, etc. Basically it means I don’t get a ton of flexibility, but also am not expected to work overtime without compensation.

  8. Antilles*

    One major, MAJOR change from the originally proposed 2016 revision versus the overtime pay law that actually went into effect: The $35k limit is not indexed to inflation. This follows the previously existing rules that were in place prior to today, but is different than the original increase proposed by the last administration which included an inflation-adjustment.
    So while it’s definitely a victory for workers to get this in law, don’t forget that the real buying power of that $35k is going to be slowly chipped away at by inflation for years – based on previous history, it’ll likely be at least a decade away if not more.

    1. MassMatt*

      I don’t know why any tax or financial changes are not indexed to inflation, except because people passing the legislation want the increases to slowly disappear over time.

      The worst offenders are the minimum wage and the alternate minimum tax (AMT). If the minimum wage were indexed, think of the wasted efforts and political battles that would be saved, and we might actually still have a decent middle class. AMT was originally designed to apply to a handful of extremely rich people; increasing numbers of fairly middle-class people are subjected to it, and it is extremely difficult to calculate.

      1. Wintermute*

        it’s more cynical than that– they don’t want the “credit” to go to some faceless bureaucrat, politicians want to be able to put their name on a bill saying “I raised this”. That’s why Social Security isn’t indexed, because old people vote like crazy and politicians want to tell them “I put more money in your pocket”.

        1. Massmatt*

          Social Security IS indexed to inflation, though they recently changed the way the index will be calculated so increases will likely be slower.

  9. Cheapskate*

    If one’s employer chooses not to abide by these laws, to whom does one reach out to get them enforced? Asking for a former co-worker who said the boss would never pay overtime.

    1. Narise*

      They need to take their information to the DOL for their state or file with the Federal DOL if the state doesn’t have their own department. If they have proof that they were not paid overtime during the past 2 years DOL will investigate. DOL does not always go back more than 2 years unless they find repeated intentional errors/classifications.

  10. J.E.*

    This doesn’t really change much for me. I’m still non exempt and I work in state higher ed, so like government, we get comp time instead of extra pay for hours worked over 40 (there are some departments like the physical plant that are exceptions and do get overtime pay).

  11. DaniCalifornia*

    “The most elusive and imprecise of the definitions of exempt job duties is for exempt “administrative” job duties.The Regulatory definition provides that exempt administrative job duties are:
    (a) office or nonmanual work, which is
    (b) directly related to management or general business operations of the employer or the employer’s customers, and
    (c) a primary component of which involves the exercise of independent judgment and discretion about
    (d) matters of significance.”

    This is the debate in our office/my life. I’d love to hear from other career admins/admin asst/sr admins/EAs about how they are paid/how their office works/if they are exempt.

    I don’t have an official title but it equates roughly to an EA for the team of CPAs I support. I work lots of OT during tax season and am paid salary. I don’t supervise anyone and I can’t make important decisions (hell I can’t make small decisions w/o running it by 2 people above me), I don’t handle their personal matters or anything for the company that involves operations. I directly support the CPAs and all of our clients. My boss like a lot of people I know just assumes salary means exempt. While I make good money (not enough to be the highly compensated category) I’ve always wondered. I’m job searching as well and I want to make sure I am properly classified for whatever new job I get. Looking at mostly EA roles.

    1. The Man, Becky Lynch*

      Yeah, I feel like it’s playing super fast and loose with the classification rules to put an EA or administrative assistant on salary. I can’t even due salary and I’m passed the admin level long ago. My boss is a stickler for rules [woohoo in this case because I’m not ready to ever go back on salary, I was burned once and once is enough].

      There’s a reason why mis-classifications are one of the top things that get caught in audits by the DOL.

    2. MsChanandlerBong*

      When I was an administrative assistant, I was considered exempt (and paid $25,000 a year, so it’s not even like I was making a decent salary). I had some basic clerical duties, but I also did some high-level stuff, such as filling out tax-abatement applications, doing expense reports for our project managers and contractors, taking care of mortgage documents when we closed on a property (it was a real-estate development and property-management firm), collecting rent, following up on late rent payments, etc. I always thought I should have been non-exempt.

      1. The Man, Becky Lynch*

        Yeah, those are pretty important tasks but the importance of the tasks don’t matter much. Bookkeepers do important things too but unless they’re managing people or making big enough decisions, they’re not exempt employees either.

        You have to have autonomy and decision making in your regular day to day that can drastically affect the business itself [like you can purchase a fleet of trucks, not just purchase office supplies and chairs when you need one] and not just once in a blue moon. That’s what my payroll law class kept essentially screaming at us the entire time.

    3. Veronica Bradshaw*

      Having the right kind of manager helps here. I just transitioned from temp to perm and am an exempt admin for a department. My position is not expected to be any more “butt in seat” than anyone else and our department head trusts us all to manage our time effectively. Working an evening event is 100% fine with me, because if I have to take half a day for a medical or other personal matter I don’t need to deduct it or use PTO. As an admin, it’s all about finding management who sees you as part of the team.

  12. Jay*

    I can only imagine the wailing and gnashing of teeth going on with some of my early employers. Specifically the ones who were sooo fond of giving high performing employees ‘Manager’ titles that increased their responsibilities while completely eliminating their overtime pay, all while ‘capping’ their salaries at less than the state minimum wage, when you take into account all the hours they had to work. I once actually quit a (really crappy, really temporary) job over being ‘promoted’.

  13. MassMatt*

    Thanks Alison for posting info about this. Questions about employee classification come up frequently in the comments, there is a lot of confusion about it, and unfortunately many employers don’t understand the rules either, or deliberately misinterpret them in their favor.

  14. ampersand*

    Looking at minimum wages by state–Georgia’s is set at $5.15 for employers that aren’t subject to the FLSA. That amount makes me want to hyperventilate.

    1. Jay*

      And it gets so much better when you learn exactly how many jobs are somehow exempt from both minimum wage and overtime requirements through loopholes designed for migrant labor or jobs where tipping is the rule. Not that that’s an excuse. Evil conditions are Evil. Even if you’re from South Of The Border or a waiter. I was still working ‘permanent seasonal’ jobs until I was 28 years old. And I had to move 800 miles away to a Northeastern state to escape it.

      1. Carlie*

        Also, employers are allowed to pay disabled workers as little as they want below minimum. They just have to file paperwork to get approval for it.

      2. Gazebo Slayer*

        And the rules for migrant labor are disgusting. Last I heard the federal agricultural minimum wage was $1.60 an hour. Yes, $1.60. Even if your employer pays for your housing, that is unconscionable. And of course the reason for the low agricultural minimum is that in the 1930s the Southern Democrats wouldn’t go along with the New Deal unless it let them pay absurdly low wages in industries with large numbers of black workers. Like sharecropping, Jim Crow, and barely-paid prison labor paired with mass incarceration, it’s another attempt to get as close as possible to reinstating slavery.

    2. The Man, Becky Lynch*

      Of course they do…of course.

      Since anyone who is subject to FLSA is entitled to at least Federal minimum wage which is an ugly 7.25/hr.

      There are always awful nasty gross conditions out there that people don’t want to think exist. It makes my skin crawl.

      I’m still upset from that poll Alison did awhile back with positions/wages that people around here submitted for what they make, BTW. It’s pretty outragous how awful wages are in general in so many places.

      1. a crap wage in a crap place*

        And yet, downward pressure on wages is rapidly increasing with demands for increased shareholder returns, general uncertainty, a competitive job market and automation.

        It’s looking more and more like real wages are set to decrease for the foreseeable future.

    3. noahwynn*

      I was paid more at my first retail job in 2000, $5.75, and it was in Oklahoma, so not exactly a high wage area. That is crazy.

  15. Spartan*

    I can see teachers / schools getting hit by this HARD. Most start teachers work way more then 40 hours a week and less then that amount of money. This could create the situation of hourly teachers versus salaried and that difference can cause a division at times. Why doesn’t the new guy have to stay late for the program when we all do?

    Interesting to see how it all plays out.

      1. fhqwhgads*

        My understanding is it’s not that teachers were explicitly exempted from this change; it’s that the part of the law this change applies to already/always did not apply to teachers. All this changes is the number.

          1. Devil Fish*

            Average annual salary for learned professionals in the states:

            Doctors: $299k (average $223k for primary care, $329k for medical specialists)
            Lawyers: $120k
            Teachers: $60k (average starting salary ranges from $31k – $55k by state)

            That’s … interesting. O_o

            1. Holly*

              Keep in mind these are averages. There are big law firm lawyers that make $180k a year out of law school and nonprofit lawyers that could make $35k

            2. noahwynn*

              Doctors definitely do not start out at $299k. Starting is closer to $60k during residency. It can take several years to reach the numbers listed above and they often have huge amounts of student loans to pay back.

              1. Kolin*

                Teachers also have large student loans to lay back. And AFAIK, the top range of teacher salaries is still much lower than the middle range for doctors and lawyers, so the comparison still works.

  17. Wintermute*

    I think what a lot of people forget is that raising the minimum wage only affects the lowest end of the labor market. If you tackle the rampant overwork of American labor then you add more jobs at every level. If you can’t get 60 hours a week out of an engineer earning 75,000 a year, then you need 50% more engineers. In addition, increasing the number of jobs the economy requires to higher than the number of people (so a theoretically negative unemployment would be needed to fill every job companies wish to be filled) then they would have to compete over labor rather than being able to dictate wages and terms on a “take it or leave it” basis for all but the highest-competition fields.

    People will always pay the least they can for something they want, that’s human nature, I think tackling overtime abuse is by far the best tactic to improve the lot of American workers.

  18. Purplestar*

    I can’t wait to see how my employer handles this….if they even try. I am an hourly employee – who is currently making management level decisions(sigh) and they will not pay me overtime. If I go over 40 in one week I can take the overage as comp time within the two week pay period. If the new rules strictly outline a 40 work week then I will be leaving early every Friday if I can’t carry over into the next week of the pay period. Or they could just suck it up and pay me for what I am actually doing…yeah, I need another job.

    1. Wintermute*

      If you are hourly then comp time is not legal. You can call the NLRB about that alone, and should, they must pay hourly employees overtime for time over 40 hours/week.

    2. Devil Fish*

      Do you work in government? That’s the only one I know that has weird loopholes that allow comp time and other sorts of fuckery because they exempted themselves from their own laws.

      The old rules strictly outlined a 40 hour work week. To be clear: that doesn’t prevent your employer from requiring you to work more than 40 hours per week (so leaving once you hit 40 isn’t necessarily the best option)—they can tell you to work 80 hours per week if they want to, but they have to pay you overtime on everything you work over 40 hours in one week.

      Contact your state labor department and see what they say about, they’ll have the most relevant information. And document everything your bosses tell you about overtime and keep track of how many hours you work. Good luck. :)

  19. EFLteacher*

    I’m guessing this of course won’t apply to teachers. Can the government please handle low teacher salary next, please?

  20. Denise C*

    Is this true in California? I’ve been told something different than what you’re describing from my employer.

  21. Rachel*

    Hi! I work for an American-owned NGO and am working overseas, and making much less than that cutoff – my employer let me know that these overtime and exempt vs. non-exempt rules don’t apply to employers working overseas – is that correct? thanks for the help!

    2. Lissa*

      Just want to confirm that if you are out of the country for more than 330 days you are filing for the foreign earned income exclusion because at that rate, most of your income would be exempt from federal income tax – up to like $105K (though your housing and certain other allowances would be considered part of your total income but if you are making $30K in income and they are paying your rent to a total of $30K plus you get maybe a hardship allowance of $10K, you’re still under the threshold. I don’t believe the ticket cost of an annual trip home would count towards income). I will saying having worked in international development for 20 years, you can stay overseas with an American NGO and do much much better than what you are making now.

  22. TechServLib*

    Curious to see how this will impact job postings in my field that seem to always start at $47,500 (conveniently just above the previously-anticipated threshold).
    It’s cynical to assume that the starting salaries will actually go down due to this change, but I can’t help but think that will happen. We’re an industry with way more qualified people than available jobs and employers who are always under tight budget constraints.
    Not to mention that in my area, $47,500 is just enough to scrape by on, assuming you don’t have debt or other expenses to worry about. $35,500 would be extremely difficult.

  23. Anon for this*

    Well this affects me since I make about 33K a year and am currently classified as exempt. Hoping my employer just raises this to 35K but the budget for the next fiscal year has been approved so we’ll see. . .

  24. Anonymous 123*

    Our company changed how they noted our pay on our paystubs last pay period, previously we were listed as “Salary” even though we were docked sick time/required to use PTO for a few hours out/not allowed to work OT.

    I didn’t do the math at the time, but I see my annual pay is now $200. over the base to need to pay OT where it was a bit below that previously. If that is my raise for this year, it a 14 cent an hour raise. Oy.

  25. Penny*

    Huh. I make above this threshold and below what the previously proposed threshold would have been. I am non-exempt and really wish I were reclassified to exempt. At my employer exempt workers rarely have to work overtime anyway, but their PTO accrual is almost double what non-exempt staff make. I want that PTO! It’s probably a reach, but since my regular salary now falls above the threshold anyway, maybe my employer is more likely to consider changing my position to exempt? (This is a rhetorical question, obviously.)

    1. Office Plant*

      Your job has to pass several duties tests to be made exempt- your employer can’t just arbitrarily make you exempt. The DOL website should have that info- if it looks like your job fits, then it might be worth having a conversation with your employer about it.

  26. K.*

    Relatedly: I have a friend who was hired at a job (for a local, small business) to work very part-time hours and was given a salary, rather than hourly rate. She was told that she needed to complete these tasks each week and then she would be paid a set amount for her services. These tasks usually took about 2 days a week. However, the business was bought by someone else. The new owner has greatly increased her task list for each week without increasing pay, so her hourly pay is now coming it at under minimum wage and she is working 40 or more hours each week. My understanding is that this is super illegal. She also doesn’t have a contract with either the first or second owner outlining her pay or job.

    However, based on what I have found, it is hard for me to understand what the guidelines are for part-time exempt employees versus full-time exempt employees. How do I know for sure how the law is being broken? She thinks her new owner would adjust if she was able to explain the legalities. Based on what I have read online, I’m unclear. Thanks!

    1. Starbuck*

      I always wondered how “part time” salaried positions were meant to work in scenarios like this. From what I can tell via some googling, it looks like the same minimum salary threshold applies regardless of part time or full time status, so as long as they’re paying her at least the current minimum ($23,660/year) then it would seem they could have her work as many hours/tasks as they want, regardless of whether they call her ‘part time.’ It would be a lie, but not illegal as far as I can tell.

      If she’s correctly classified as exempt (she may not be! have her look into that too!) and paid at least $455/week then yeah, she’s exempt from the protections that require she earn at least minimum wage on an hourly basis so I don’t think she’d have any legal recourse from that angle. It happens to a lot of people, unfortunately.

      But also your language here – “She was told that she needed to complete these tasks each week and then she would be paid a set amount for her services. ” kind of make it sound like maybe they have her working as a contractor, and not an actual employee? Contractors get paid for their “services” (and can set their own rates and hours, in theory) whereas employees get paid for their work.

      Regardless, has she even tried to negotiation? Outline how many hours/days she originally agree to work at and for what pay, and note how much that has increased, and outline what she wants – less duties, fewer hours, higher pay, etc. – or she could just describe the change and tell the boss it isn’t working for her and ask what he suggests.

    2. Starbuck*

      To add – this is the clearest language I could find about how the salary threshold applies to part-time exempt workers:

      “The DOL Wage and Hour Division has observed that the FLSA regulations do not permit employers to take part time status into account when determining whether a salary level meets the exemption’s requirements. In a 2008 opinion letter, WHD explained clearly that “the salary requirement of $455 per week may not be prorated to reflect reduced hours, and the employee paid a salary of [less than that] does not qualify for the exemption. . . .”.

      So if she’s not getting at least $455/week, that would be where to start.

  27. Mordonez*

    So…how would this work for employees in this range who also have on-call duties, which we currently pay at a flat rate If an emergency phone call comes in overnight, we have someone respond to it–it ammounts to a call or two at most per week, and we pay a flat rate on top of the hourly -500/wk. If you get 6 calls, 0 calls, same rate. People have this duty twice ish per quarter, and 2 of my team members are under $17.10/hr.

  28. Kisses*

    How should one go about bringing this up to an employer who hasn’t followed proper exempt/non exempt procedure in the past? Should someone who makes $600 a week have been exempt in the past for outdoor labor work still be exempt with no raise?

  29. Jay Bee*

    I’m based in NYC, and we adjusted employees under $58.5k to hourly this year, because of our state’s ruling. Does this Federal ruling mean that this $58.5k threshold no longer applies?

    Employers in New York City
    NYC employers will see their overtime salary threshold increase to $1,125 per week, which calculates to an annual salary of $58,500, with the only distinction being between “small” and “large” employers. Businesses with 11 employees or more are considered large employers and will see its overtime salary threshold increase to $1,125 per week by December 31, 2019. Businesses with fewer than 11 employees are considered small employers and won’t see its overtime salary threshold increase to the maximum amount of $1,125 per week until December 31, 2019.
    https://www.completepayroll.com/nys-minimum-wage-and-overtime-salary-thresholds

  31. RedinSC*

    Also, remember different states have different rules. While that is the federal number, California has a rule that says that exempt employees must earn at least twice the minimum wage. So, while $35,568 might be the Federal level, if you are working in California, where the state minimum wage is $12/hour, an employee would have to earn over $49,920 to be considered exempt. And our minimum wage is going up, so each year that amount is also going up.

  32. Faithful Reader*

    My employer is actually undertaking a huge compensation and position alignment review and one of the outcomes is that several people on my team, who are currently exempt (and earning well above the new proposed ceiling of $35,568, also) are going to have their positions reclassified as non-exempt, making them eligible for overtime pay or comp time, but with no change to their salaries. This decision was made based on their job responsibilities, and unlike California, our state does not have any specific rules around exempt vs. nonexempt.

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