How Will Changes to Overtime Rules Affect Employers? Joshua B. Loren and Bruce E. Loren | Sep 30 2019

Clients often ask which employees are entitled to receive overtime pay. Starting January 1, 2020, new guidelines from the Department of Labor clarify who is and who is not an “exempt” employee. This article provides a basic overview of who is eligible for overtime and when it is required under the new guidelines.

To be exempt from overtime under the federal Fair Labor Standards Act (FLSA), and Florida’s equivalent statute, employees must be paid a salary of at least the threshold amount AND meet certain duties tests. The chart below summarizes the current and future limits for “exempt” and “non-exempt” employees.

CurrentJanuary 1, 2020
Regular Employee$455/week or $23,660/year$684/week or $35,568/year
Highly Compensated Employee$100,000/year$107,432/year

Any employee who falls below these threshold limits is “non-exempt” and must be paid 1 ½ times their regular hourly rate for hours worked in excess of 40 in a workweek.

The salary limits alone do not determine who is entitled to overtime. An employee who meets or exceeds these limits must also pass one of several duties tests to be “exempt” from overtime pay. These tests have not been changed by the new guidelines and are summarized below.

Executive ExemptionAdministrative ExemptionProfessional Exemption
  • Primary duty must be managing the business or a department of the business.
  • Must customarily and regularly direct the work of at least two employees and have the authority to hire or fire workers or the ability to influence hiring or firing.
  • Primary duty must be office or nonmanual work that is directly related to the management or general business operations.
  • Must include the exercise of discretion and independent judgment with respect to matters of significance.
  • Primary duty must require advanced knowledge in a field of science or learning that is customarily acquired by prolonged, specialized, intellectual instruction and study.

Under the new 2020 guidelines, highly compensated employees are those receiving a salary in excess of $107,432 per year. Highly compensated employees are eligible for exempt status if they meet a reduced duties test as follows:

  • The employee's primary duty must be office or nonmanual work.
  • The employee must "customarily and regularly" perform at least one of the exempt duties of an executive, administrative or professional employee.

Employers should evaluate salary data for current exempt workers to determine who is earning below the new threshold and weigh the cost of raising employee salaries against the cost of reclassifying employees as nonexempt and paying overtime. Additionally, take the time to review workers' job duties to ensure that they satisfy one of the above exemptions under the duties tests.

If you have any specific questions concerning overtime regulations or best practices do not hesitate to contact an attorney experienced in employment law and human resources.

Joshua B. Loren and Bruce E. Loren of Loren & Kean Law are based in Palm Beach Gardens and Ft. Lauderdale. Loren & Kean Law is a boutique law firm concentrating in construction law and employment law. Mr. Loren focuses his practice on labor and employment law, only representing the interests of employers and business owners. The firm represents businesses in a wide range of disputes, including OSHA investigations and citation contests, DOL investigations, discrimination claims, and state and federal wage litigation. They can be reached at jloren@lorenkeanlaw.com or bloren@lorenkeanlaw.com or 561-615-5701.