When you earn a salary instead of an hourly rate, your employer may expect you to work long hours for no overtime pay. As an exempt employee, your hours don’t matter to your total income. But with a new change to labor laws, you may now qualify for overtime.
The Department of Labor (DOL) recently raised the salary threshold for employees exempt from overtime benefits. With the change, around 1.3 million U.S. employees could receive extra pay when they work more than 40 hours a week.
Raising the salary threshold for exempt employees
To be exempt from overtime, a worker must receive a salary instead of an hourly rate. Previously, any exempt employee had to earn more than $23,660 per year. But as of January 1, 2020, that limit raises to $35,568. Any worker earning a salary less than this amount can qualify for overtime pay.
Exempt employees must also perform specific job duties related to executive, administrative or professional roles.
The exempt classification helps companies avoid paying overtime
Many companies may try to avoid paying overtime by classifying workers as exempt. The practice lets them pay low salaries while requiring employees to work long hours. Salaried workers may work well past the overtime limit of 40 hours per week without receiving compensation. Companies can avoid paying the increased rate for each overtime hour worked.
The change may mean more money in your pocket
If you make less than the new limit, the change will make sure that you receive more money in your paycheck. Whether your company chooses to raise your salary or pay you for your overtime hours, you can expect more compensation.
