If you’re an employee who works more than 40 hours a week, you’re probably familiar with the concept of overtime pay. But did you know that there are some exceptions to the rule? One of these is the penalty overtime exclusion, which will be in effect in 2022. In this article, we’ll take a closer look at what this means for employees and employers alike.
What is the Penalty Overtime Exclusion?
The penalty overtime exclusion is a provision in the Fair Labor Standards Act (FLSA) that allows certain employers to pay their employees a fixed salary without having to pay overtime for hours worked over 40 in a week. The exclusion applies to employees who meet certain criteria, such as being paid a salary of at least $684 per week and performing certain types of work, such as executive, administrative, or professional duties.
Changes to the Penalty Overtime Exclusion in 2022
Starting in January 2022, the Department of Labor is set to make some changes to the penalty overtime exclusion. The most significant change is the increase of the salary threshold from $684 per week to $970 per week, which is equivalent to $50,440 per year. This means that employees who earn less than $50,440 per year will be eligible for overtime pay if they work more than 40 hours a week.
Who is Affected by the Changes?
The changes to the penalty overtime exclusion will affect employers who have employees who are currently exempt from overtime pay, but who earn less than $50,440 per year. If these employees work more than 40 hours a week, their employers will be required to pay them overtime at a rate of one and a half times their regular rate of pay.
How Will the Changes Impact Employers?
The changes to the penalty overtime exclusion will have a significant impact on employers who currently have exempt employees who earn less than $50,440 per year. These employers will need to either adjust these employees’ salaries to meet the new threshold or begin paying them overtime for hours worked over 40 in a week. Failure to do so could result in legal action, including fines and penalties.
How Will the Changes Impact Employees?
The changes to the penalty overtime exclusion will have a positive impact on employees who are currently exempt from overtime pay but who earn less than $50,440 per year. These employees will now be eligible for overtime pay if they work more than 40 hours a week, which could result in a significant increase in their paychecks. However, some employers may choose to reduce these employees’ hours or adjust their salaries to avoid paying overtime, which could have a negative impact on their earnings.
What Should Employers Do?
If you’re an employer who has employees who are currently exempt from overtime pay but who earn less than $50,440 per year, you’ll need to take action to comply with the new regulations. You can either adjust these employees’ salaries to meet the new threshold or begin paying them overtime for hours worked over 40 in a week. You should also review your current policies and procedures to ensure that they are in compliance with the FLSA and any other applicable laws.
Conclusion
The penalty overtime exclusion is an important provision in the FLSA that allows certain employers to pay their employees a fixed salary without having to pay overtime for hours worked over 40 in a week. However, changes to the exclusion in 2022 will mean that employees who earn less than $50,440 per year will be eligible for overtime pay if they work more than 40 hours a week. Employers will need to take action to comply with the new regulations, including adjusting salaries or paying overtime. If you’re unsure about how the changes will impact your business, it’s best to consult with an employment lawyer.