New FLSA Overtime Rules & Regulations for Businesses | Plakas Mannos

Anyone who owns or runs a business is at least somewhat familiar with how “overtime” works. If you employ hourly workers, like a food service worker, machinist, or nurse, then, generally, they are entitled to be paid one and one-half times their normal hourly rate if they work more than forty hours in a workweek.   

“White collar” or salaried employees though, like administrative staff, engineers, or accountants, are often paid a predetermined and fixed salary that is not subject to reduction because of variations in quantity or quality of work performed. This means that salaried employees are not entitled to overtime pay for working beyond forty hours in a workweek… right? 

How Do FLSA Overtime Rules Typically Work?

The Fair Labor Standards Act (FLSA) generally requires employers to pay their employees one and one-half times their normal rate for every hour that those employees work above forty hours in a workweek. 29 U.S.C. § 207(a)(1). This increase in pay is what we normally call “overtime,” and most of us are familiar with how this works.  

However, not all of us are familiar with the exemptions to the FLSA overtime regulations. Employees and employers both often assume that salaried workers are generally exempt from these overtime regulations. Though this is generally true, whether this “white collar” exemption applies for a given employee involves a deeper analysis. 

“White collar” employees are normally exempt from FLSA’s overtime pay requirement if they meet a three-part test:  

1. Salary Basis Test: The worker must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;  
   
   
2. Salary Level Test: The amount of salary paid must meet minimum specified amounts; and  
   
   
3. Duties Test: The employee’s duties must primarily involve executive, administrative, or professional duties. 

See 84 Fed. Reg. 51230 (2019), cited by Helix Energy Solutions Group, Inc. v. Hewitt, 598 U.S. 39, 44-45, 143 S.Ct. 677; see generally 29 U.S.C. § 213(a)(1); 29 C.F.R. §§ 541.100, 541.600.  

New FLSA Overtime Regulations Means More Employees Are Eligible for Overtime 

As of July 1, 2024, millions of additional workers became eligible for overtime compensation thanks to new regulatory changes implemented by the U.S. Department of Labor (“DOL”). Because of these new changes, employers should exercise extra caution when processing payroll to ensure that they are complying with FLSA’s new overtime requirements.  

Currently, white collar employees earning less than $844 per week, or less than $43,888 per year, must be paid overtime if they work more than forty hours in a given workweek. The DOL has already scheduled a follow-up increase in the salary threshold for January 1, 2025, and as of that date white collar employees earning less than $1,128 per week, or less than $58,656 per year are eligible for overtime if they work beyond the forty-hour workweek. Here’s a breakdown of these changes:  

29 C.F.R. § 541.600.  

The DOL has plans to revisit these salary thresholds based on current wage data periodically. This means that employers need watch closely for new updates to ensure that they are complying with FLSA. 

What Should Employers Do to Follow New Overtime Regulations? 

These new overtime regulations will significantly impact employers, classifying millions of workers as now overtime eligible employees. If an employer fails to comply with these new regulations, they could face serious legal penalties. 

However, there are many steps that employers can take to ensure that they comply with these new FLSA overtime regulations, including: 

• Audit Current Employee Salaries, Hours, and Duties: Employers should take time to audit their worker’s salaries, job duties, and hours worked to ensure that none of their salaried workers are paid below the above salary thresholds without appropriate overtime compensation.  

• Update Timekeeping Procedures: Adopting and enforcing thorough and efficient timekeeping procedures ensures that non-exempt, salaried employees do not work past their scheduled hours without receiving overtime compensation.   

• Update Overtime Policies: For this reason, employers should update their overtime policies and ensure and communicate to staff that non-exempt, salaried employees are strictly prohibited from working past forty hours in a workweek. Otherwise, an employer may face legal penalties.  

• Reclassify Employees as Non-Exempt as Necessary: Millions of workers are now going to be reclassified as non-exempt workers eligible for overtime compensation. Accordingly, employers should take steps to ensure that those salaried workers being paid below the above salary thresholds are paid overtime when working beyond the forty-hour workweek.  

Here If You Need a Labor Law Attorney Near Canton & Akron, Ohio 

Our team of business and employment lawyers is happy to assist business owners as these new FLSA overtime regulations take effect, including new overtime rules for salary employees. If you believe your company may face new contractual, employment, or business issues as a result of these new FLSA overtime rules and regulations, please do not hesitate to contact us.

About the Authors

Gary Corroto is an attorney and partner for Plakas Mannos practicing law in various areas, including commercial litigation, energy, oil and gas, and more.  

Tyler Speer is an associate attorney at Plakas Mannos in various areas, including employment and workers’ compensation, personal injury, wrongful death, commercial litigation, and more.