Overview of the New Overtime Regulation
The Fair Labor Standards Act (FLSA) has long provided that employees who work more than 40 hours a week receive overtime pay, subject to certain requirements. The Department of Labor’s latest rule enhances this protection for many salaried workers, including those in public sector roles such as municipal employees and utility workers. Here’s what you need to know about the new overtime regulations and their implications for local government workers.
Key Changes in the Overtime Rule
Executive, Administrative, and Professional Exception: The most common types of exceptions remain in play, subject to the new Salary Thresholds. The most common exception details include:
- The employee receives a salary,
- The salary meets or exceeds a specified minimum threshold (see threshold changes below), and
- The employee primarily engages in executive, administrative, or professional tasks.
DOL guidance on this topic can be reviewed here https://www.dol.gov/agencies/whd/overtime/rulemaking/faqs
Effective Date and Salary Thresholds: The new overtime rule will come into effect on July 1, 2024, bringing significant changes to the salary thresholds for overtime eligibility. The current salary threshold is $684 per week, or $35,568 per year.
- July 1, 2024: Salaried workers earning less than $844 per week will be eligible for overtime pay ($43,888/year)
- January 1, 2025: This threshold will increase, making salaried workers earning less than $1,128 per week eligible for overtime pay. ($58,656/year)
- July 1, 2027: The salary thresholds will be updated every three years to reflect current wage data.
Highly Compensated Employees: The rule also raises the compensation threshold for highly compensated employees:
- July 1, 2024: The annual compensation requirement will increase from $107,432 to $132,964.
- January 1, 2025: This amount will rise to $151,164 per year.
- July 1, 2027: Future updates to these thresholds will occur every three years.
Implications for Public Sector Workers
Eligibility for Overtime Pay: With these updated thresholds, many salaried workers in local government positions who were previously exempt will now qualify for overtime pay. This includes employees whose salaries fall below the new thresholds and who perform qualifying job duties.
Administrative Adjustments: Municipalities will need to adjust their payroll systems to comply with the new regulations. This includes ensuring that salary thresholds are updated according to the new rules and maintaining accurate records of hours worked by employees who are newly eligible for overtime pay.
Practical Steps for Compliance
- Conduct a Salary Review: Local governments should review the salaries of their employees to determine who will become eligible for overtime pay under the new thresholds.
- Update Payroll Systems: Ensure that payroll systems are configured to account for the new salary thresholds and the required overtime calculations.
- Training and Communication: Train HR and payroll staff on the new rules and communicate these changes to employees. Make sure everyone understands who is now eligible for overtime and how it will be calculated and paid.
- Regular Reviews: Plan for the regular review and update of salary thresholds as mandated by the new rule, to keep pace with wage data and ensure ongoing compliance.
Conclusion
The updated overtime rule represents a significant shift in how overtime pay is managed for salaried workers, including those in local government. By understanding and implementing these changes, municipalities can ensure compliance, improve employee satisfaction, and provide fair compensation for their workers.
Chart provided by U.S. Dept. of Labor
