If you dial the clock back to mid 2016 you might remember that we were all preparing to implement a mandatory change in the minimum salary that employees must earn to be exempted from overtime.
Okay, so that may not be the first thing you remember from that time in 2016. But chances are if you had employees on your payroll, or you were an employee that was anticipating a big raise, you will remember that it was a big deal.
Brief refresher: For almost 15 years, the Department of Labor (DOL) had made no changes to the minimum salary, which remained stuck at $23,660. Then after years of deliberation, rulemaking and public feedback, in 2016 they approved an increase: from $23,660 to a whopping $47,476, more than doubling it.
But because the increase was so large, it was controversial. That new regulation was going to be very expensive and disruptive to businesses. Even those like me who supported an increase, thought that it was too much, too fast. I advocated a gradual step increase. So it was no surprise when several states sued the DOL and a Texas judge put a stop to it before it could take effect in December 2016.
Then came the new administration and the regulation has been under review all this time. Now fast-forward to the present: We have an update. The DOL has approved a new minimum ($35,560) that goes into effect January 1, 2020
So, starting in 2020, employers who have workers they want to exempt from overtime pay, will have to pay them a minimum of $35,560. For example, convenience stores, retail stores as well as the fast-food industry, are notorious for classifying employees as “managers”, paying them as little as the old $23,660, and having them work very long hours without being required to pay overtime. Starting in 2020, they’ll have to either increase their pay, or pay them overtime. The DOL estimates that 1.3 million workers will fall in the latter category and will become newly eligible for overtime. That’s great news for those workers.
Overall, I find the new $35,560 minimum quite reasonable. It won’t be as heavy a burden for employers to adjust to because it’s about half-way what was proposed in 2016, yet it’s still substantial to make a difference for workers.
For more info check out https://www.dol.gov/whd/overtime2019/overtime_FS.htm
©Copyright Eva Del Rio
Eva Del Rio is creator of HR Box™ – tools for small businesses and startups. Send questions to Eva@evadelrio.com
