Got Questions About the New FLSA Overtime Rules? We’ve Got Answers

Barring a last-minute legislative change or court injunction, we’re now just a month away from when the new Fair Labor Standards Act (FLSA) overtime rules take effect on December 1.

Hopefully, you and your company have already taken steps to prepare. But if you still have questions, here are some answers.

What’s changing under the new rules?

Basically, the minimum salary level for overtime-exempt employees is going up. And starting in 2020, the minimum salary level will be automatically adjusted for inflation every three years.

Can incentive pay count towardh the new minimum salary?

Yes, you will be allowed to count a certain amount of incentive pay – nondiscretionary bonuses, incentive payments and commissions – toward the new minimum.

Nondiscretionary? What’s the difference between a nondiscretionary bonus and discretionary bonus?

A nondiscretionary bonus is any bonus that you promise to pay in advance – for example, a bonus for meeting a production goal or a retention bonus. A discretionary bonus is given at your sole discretion without any preannounced standards.

What about benefits? Can we include the cost of benefits, too?

Um, no.

If we have salaried, exempt employees who earn less than the new minimum salary level, do we have to convert them to hourly pay?

No. They can still be paid a set salary. You just have to be sure to pay them overtime for any hours worked over 40 in a workweek.

Will our newly nonexempt employees have to record or report their hours on a daily basis?

No, not necessarily. You just have to keep an accurate record of the hours worked by your employees, but not the specific times they start or stop. It’s enough to have employees provide just the total number of hours worked each day, including the number of overtime hours, by the end of each pay period.

What about exempt employees who work from home or have a flexible schedule? Will they have to stop doing that if we reclassify them as nonexempt?

No. Overtime-eligible employees are not required to have a predetermined schedule, and there are no restrictions under the Fair Labor Standards Act (FLSA) on when or where the work is performed.

Is there a burning question keeping you up at night about these coming changes to the overtime rules? If so, please let us know by leaving a comment below.

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