New Payroll Law Could Go Into Effect1
Many of the jobs in the United States are governed by the Fair Labor Standards Act (FLSA), which protects employees from unfair practices and regulations. They control things like setting the minimum wage and overtime pay. You can be considered exempt or non-exempt from the overtime laws. If you are nonexempt, you are owed overtime pay, which is 50% greater than your regular pay rate. There are many other rules and mandates all employers must follow that are encompassed in the rules and regulations of FLSA.
If you are an hourly employee, you are paid based on the number of hours you work. This means, based on the pay of your job, you could be earning more money working on an hourly pay than a salary pay. On the other hand, hourly paid jobs are often the jobs that feel the effects of law changes first. It is much easier to cut hours off than to end a whole salary position. Oftentimes, employers will take shortcuts to avoid more costly mandates of job laws. For example, hourly paid jobs are required to provide healthcare for their employees that work over thirty hours if they have over fifty employees. To avoid this, employers will keep their employees from working more than thirty hours a week.
Unlike hourly paid jobs, salary jobs allow you the same paycheck every time. Your annual wage is stable and unchanging. The average work week has forty hours, and the employees must keep up with their responsibilities and deadlines, making it harder to distinguish between home life and work life. The FLSA determines whether employees must be paid by the hour or with a salaried wage.
On September 24, U.S. Department of Labor released a new rule that allows 1.3 million employees to become eligible for overtime pay. It updates the wage necessary to exempt executive, administrative and professional employees from FLSA’s minimum wage and overtime pay requirements. The new earning threshold takes into consideration the rising employee earnings since 2004. It will: raise the standard salary level from $455 to $684; raise the total annual compensation requirements from $100,000 to $107,432 per year; and revise special salary of workers in U.S. territories and the picture industry. The new overtime rules will raise the salary cutoff to $35,658 and employees who make less are now eligible for overtime pay. This rule will go into effect on January 1, 2020.
This is the first time in over fifteen years that America has updated their overtime pay laws, making it much more accessible. There were listening sessions in 2018 for this very issue. Lobbyists called for an update of these regulations. The Department of Labor estimates that about 1.2 million Americans will benefit from this new rule. They will be entitled to minimum wage and overtime pay due to the increase of the standard salary level.
Coastal Human Resource Group, Inc. is a Human Resource Outsourcer (HRO). We serve as a full-service human resources department for small and medium-sized businesses which provide compliance screening as well as background checks. Visit www.Coastal-HR.com or give us a call at 251-478-7444. We’re here to help ensure that all your human resources needs are met.