We’ve received many questions on the new federal overtime rule. Here are some of the most common questions we’ve received, as well as the answers.
Question: How does the new overtime rule for white-collar exempt employees affect part-time or seasonal employees?
Answer: These employees must also earn $684 per week if they are classified as exempt. If they do not earn at least $684, they may not be exempt. The minimum required salary is not based on a 40-hour week, and it may not be prorated for part-time employment. So, whether you have an employee who works 20 hours per week or 40 hours per week, if they are classified as exempt they must earn $684 per week. A part-time or seasonal exempt employee doesn’t have to make $35,568 annually as long as they get $684 every week. For example, they could work two weeks per month and make $684 each week.
Question: Does the duties test still exist?
Answer: Yes. There was no change to the duties test, and exempt employees still must meet the duties test and the salary test to be exempt. An hourly (nonexempt) employee who makes $684 per week, but does not meet the duties test, needs to stay hourly.
Question: Do employers have to switch employees to exempt if they meet the duties and salary test?
Answer: No. Employers could decide to pay all employees an hourly wage, plus overtime pay as needed. All employees may be nonexempt (hourly), but not all employees may be exempt (salaried).
Question: Are all businesses affected by this new time rule?
Answer: Yes, no business or industry will be excluded. In fact, restaurants, non-profits, and other service industries will likely face some of the tallest hurdles in complying with the new law, mainly due to a tight labor market and other business challenges.
Question: Who is NOT affected by this rule change?
Answer: Employees who are classified as nonexempt (“hourly”) won’t be affected. For instance, inside sales professionals generally are nonexempt. Some employees may be exempt from overtime, but are still entitled to minimum wage, such as farmworkers, certain employees of motor carriers, taxi drivers, and certain commissioned employees in retail or service establishments, to name a few.
Michelle Higgins is an Associate Editor on the Human Resources Publishing Team and she creates content on a variety of employment-related topics including benefits, compensation, overtime, wage deductions, exempt/nonexempt employees, health and retirement plans, independent contractors, and child labor.
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