Should Your Supervisor Be Earning Overtime?

The new salary threshold to qualify employees as exempt from overtime is fast approaching. Is your organization prepared?

Now is the ideal time to audit job classifications regarding exempt versus non-exempt employee categorizations. Incorrect overtime classifications remain one of the most commonly litigated wage and hour violations. Simply giving employees a title like Supervisor or Manager and paying them an annual salaried amount does not automatically exempt them from overtime eligibility.

Exempt or Non-Exempt: Understanding Salary Thresholds

Understanding exempt versus non-exempt employee status is crucial for determining overtime eligibility. Effective July 1, 2024, the new minimum salary threshold for exemption from overtime will increase to $844 per week, up from $684 per week. This significant change underscores the need for employers to reassess employee classifications to ensure compliance.

The Three Key Tests for Overtime Exemption

To determine whether a worker is exempt from overtime pay, three key tests must be met:

1. Salary Basis Test: The employee must be paid a predetermined, fixed salary that is not subject to reduction based on variations in work quality or quantity.
2. Salary Level Test: The employee’s salary must meet the DOL’s minimum threshold.
3. Duties Test: The employee’s job duties must primarily involve executive, administrative, or professional responsibilities as defined by the DOL.

For more details on qualifying an employee’s exemption status, refer to the Department of Labor Fact Sheet.

The Importance of Accurate Job Classifications

Misclassifying employees can lead to severe consequences, including hefty fines and back pay for unpaid overtime. Employers need to be vigilant in ensuring that job titles reflect actual job duties and salary structures meet the required thresholds.

Proactive Measures for Compliance

To proactively mitigate risks and ensure compliance employers should:

• Conduct Regular Audits: Regularly review job classifications to ensure they align with current regulations.
• Update Job Descriptions: Make sure job descriptions accurately reflect the duties performed and are consistent with the DOL guidelines.
• Training and Education: Educate HR personnel and managers on the importance of accurate job classifications and the implications of misclassification.
• Consult Legal Counsel: Seek guidance from legal experts to navigate the complexities of employment law and ensure all classifications are compliant.

Partnering with eGage for Accurate Job Classifications

Navigating the complexities of job classifications can be challenging, but you don’t have to do it alone. At eGage, we specialize in helping businesses accurately determine job classifications, ensuring compliance with the latest regulations and minimizing legal risks. Our expertise can help your organization stay ahead of regulatory changes, fostering a fair and compliant workplace.

Stay informed, stay compliant, and let eGage support your journey in meeting the new salary threshold and beyond.  Contact us  today to learn more about how we can assist with your job classification needs.