In April, the Department of Labor (DOL) announced that it was extending overtime pay protection to cover more U.S. workers. Many workers, including certain executive, administrative, and professional (EAP) employees who meet specified salary guidelines, are exempt from overtime provisions. The new DOL rule seeks to ensure fair pay by updating the amounts these workers must be paid to be classified as exempt from overtime requirements.
Currently, salaried employees who make at least $684 per week (or a full-year salary of $35,568) are not entitled to overtime pay under the Fair Labor Standard Act (FLSA). The department’s new rule raises the pay threshold beyond which specified salaried employees must be compensated at 150% of their regular pay for hours worked in excess of 40 per week. This change is expected to impact approximately 4 million workers nationwide.
The new DOL requires that, beginning on July 1, 2024, employers must track the hours of salaried employees who are paid less than $844 per week ($43,888 per year for full-time, year-round workers). Like hourly workers, these employees will be entitled to receive one and a half times their normal rate of pay for overtime hours. On January 1, 2025, this threshold will increase again. After that date, workers earning less than $1,128 per week ($58,656 per year) will be entitled to overtime pay.
Employers that have salaried employees earning less than these threshold amounts can choose to either increase employees’ salaries or reclassify them as nonexempt. If reclassifying employees, they will need to implement time tracking systems and train newly exempt employees on time tracking procedures, ensuring that all hours worked are appropriately accounted for. Employers should make it clear that for these employees, off-the-clock work will not be allowed.
Explaining the impact of its new rule on workers, the DOL states, “One of the basic principles of the American workplace is that a hard day’s work deserves a fair day’s pay.” The guarantee of a higher pay rate for longer hours is one of the key ways the FLSA supports this idea. However, the department determined that the current salary threshold for exempting employees from overtime protection was insufficient. When employees earning as little as $684 per week are required to work long hours, their hourly pay rates can quickly plummet. For example, an employee earning $700 per week for 40 hours of work is paid $17.50 per hour, while the same employee earning the same salary but working 50 hours per week is paid just $14 per hour.
The department determined that by setting the salary threshold equivalent to the 35th percentile of weekly earnings for full-time salaried workers in the lowest wage Census region (currently the South at $1,128 per week), the DOL better fulfills its obligation under the FLSA to define who is employed in a bona fide EAP capacity. This is a new way of calculating the threshold salary for overtime exemption, and following the initial bump on July 1, 2024, this standard will be used to adjust the threshold every three years. Prior to implementation of the full increase, the DOL created a step up to $844 per week, which represents an inflation-based adjustment to the current calculation.
If you’re earning less than these increased threshold amounts after their implementation date, then your employer must begin tracking your hours and paying you overtime for any work beyond a 40-hour workweek. Employers are free to define their workweek as any continuous 7-day period; however, the workweek must remain constant and be clearly communicated to employees. If your employer fails to make the changes required by the new rule (or if they are not following the current rule), then you can initiate a claim for the pay you deserve.
The NJ Department of Labor handles wage and hour claims, including those related to overtime, that are valued at no more than $50,000. You can initiate a claim with the NJ DOL online or by mail. Be aware, however, that this process requires you to waive your right to any amount in excess of $50,000. The alternative is to file suit with the Superior Court. The court can order your employer to compensate you for all back pay owed in addition to attorney’s fees and liquidated damages of up to 200% of the unpaid wages. The employer can further be ordered to pay penalties and fines to the state. Employers who knowingly and willfully violate New Jersey’s wage and hour laws can also be subject to additional fines and even imprisonment.
If you believe your New Jersey employer is paying you less than the law requires, the Mark Law Firm can help. Our experienced employment attorneys can assess the facts of your case, help you understand your rights under New Jersey and federal law, and, if appropriate, file an action with the Superior Court. Even if your claim is under the $50,000 limit for filing a claim through the NJ DOL, an attorney can help ensure your claim is filed appropriately and give you the best possible chance of recovery.