Your Definitive Guide to The New 2020 Department of Labor (DOL) Overtime Rule

On September 24, 2019, the Department of Labor (DOL) announced the new overtime rule. It comes into force on January 1, 2020. What will change and how will it affect your business? In this short guide, you will find everything you need to know to stay compliant with the new regulation.

What Is The New DOL Overtime Rule?

With the new DOL (Department of Labor) overtime rule, around 1.3 million workers will become eligible for overtime pay. The rule updates the minimum salary threshold:

In the final rule, the Department is raising the ‘standard salary level‘ from the currently enforced level of $455 per week to $684 per week ($35,568 per year).

And so, if you hire employees who work more than 40 hours a week and earn less than $684, you will have to pay them overtime.

Additionally, the new overtime rule includes the following:

  • Raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
  • Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices;
  • Revising the special salary levels for workers in U.S. territories and the motion picture industry.

Exempt and Non-exempt Employees

Exempt and non-exempt — these are the two types of employees. But with the complicated, law-specific language used in regulations, it may be difficult to understand the difference between the two. And the more you read about it, the more confused you may get! It’s important to know to whom the new DOL overtime rule will apply. Who is exempt and who is non-exempt?

If your employees are exempt, they do not have the right to overtime pay. And to check whether employees qualify for the exemption, FLSA has a special job duties test. Exempt job duties include executive, administrative, professional, some computer jobs, and outside sales jobs.

Also, exempt employees must be paid on a salary basis at not less than $684 per week.

Non-exempt employees, on the other hand, are entitled overtime pay and are under the protection of the FLSA regulations.

How Will It Affect Your Business?

The change is inevitable and may affect many businesses whose employees work extra hours. First of all, you will have to assess who is exempt and non-exempt. This may include paperwork and inside-company research — who is working how long, how many days in a week, taking job duties test, etc. 

Secondly, labor costs. There is uncertainty about whether you should hire more staff or raise salaries of current employees. So if you have a large company with many employees and lots of projects, it may significantly affect the budget.

Then there’s compliance with the law across states. You need to adhere to the new DOL overtime rule but also be compliant with local and state regulations. So it’s important to remember about that.

? PRO TIP: If you’re using time tracking software, you are saved! All you’ll have to do is simply go through timesheets of your employees, check the payroll and budget of your company. And it all will be crystal clear!

And, of course, if you’re a freelancer or solopreneur, you have nothing to worry about – this change will not affect you and your business.

How Can Business Owners Prepare for The New Overtime Rule?

To avoid the negative consequences of the new overtime rule and strengthen your business at the same time, you can make 3 simple steps.

1. Classify Your Employees

It’s the easiest and most effective thing you can do. Simply classify your staff as exempt and non-exempt and make necessary changes in the payroll. But remember to do it before January 1. Otherwise, you will run around with your hair on fire stressed about changing rules.

2. Implement Time Tracking Software

There is no easier way to comply with the new DOL overtime tule than to track time. Tools and software can help you in a smooth financial transition. If you haven’t implemented time tracking software, it’s high time you did!

Take a look at how TimeCamp can help you prepare for the new overtime rule:

  • TimeCamp automatically tracks time — no mistakes in timesheets
  • You can easily track employee overtime, billable and non-billable hours
  • You can track time for projects and tasks and know when the time allocated for them is exceeded
  • Detailed timesheets and reports give you insight into staff’s work (TimeCamp desktop app tracks app and website usage)
  • Quick and easy timesheet approval process allows your HR department check accuracy of timesheets
  • Budgeting feature allows you to monitor state of the budget for particular projects so you can be sure not only time is tracked properly, but also finances
  • It will increase employee productivity – your staff will now focus on their work instead of on distractions. They will no longer have to stay after work and you won’t have to pay them for overtime

? PRO TIP: Integrate TimeCamp with some of the best project management tools, apps for productivity and to-do lists, and more to get the best out of your team!

TimeCamp App

? Stay compliant with the DOL overtime rules, try TimeCamp free! ?

3. Asses Your Company’s Practices and Policy

Now is a good time to evaluate your business — the core values, policies but also your employees’ work. Is your organization built on honesty and trust? Do you treat your employees equally? Are there jobs that do not bring value to the organization? These are some of the questions you have to answer to make sure inside policies are compliant with the new overtime rules.

Give everyone fair raises, talk to your employees and treat everyone with respect. Your people will appreciate it and it will help grow your business.

To Wrap It Up

The new DOL overtime rule is nothing to worry about! It’s a chance for you to assess the strengths of your business and engage staff in their work.

And remember, if you have any doubts, it’s always a good idea to consult a legal advisor. It’ll help you avoid problems and conflicts with the law. Non-compliance with the new rules may cost your business a lot of money. After all, prevention is better than cure.

Are you ready for the new overtime rule? Let us know your thoughts in the comments. And remember, TimeCamp is here to help you be compliant! ⏰

? See also:

EU: Employees Must Track Working Hours – Everything You Need to Know — check what changes you should expect in the nearest future if you work within the borders of the European Union

EU labor law tips you need to know! — A short guide on EU labor laws with helpful tips

Salary vs hourly employees – what’s the difference and benefits for employee


Your Definitive Guide to The New 2020 Department of Labor (DOL) Overtime Rule

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