DOL Final Overtime Rules Q&A

Yeo & Yeo recently hosted a comprehensive webinar titled “Unlocking Compliance: Mastering DOL’s Final Overtime Rules Through Job Duties Analysis,”  on June 12, 2024, featuring Mildred Kress from the U.S. Department of Labor. The session offered valuable insights into the latest updates on overtime exemptions for executive, administrative, and professional employees under the Fair Labor Standards Act (FLSA), outlining critical changes and essential actions for ensuring compliance.

During the webinar, we gathered questions from the Q&A session and have compiled them along with the answers we provided during the event and those we’ve researched further. Some answers are direct quotes from the presentation. We will continue to update this Q&A as new information becomes available. View all of our resources on the webinar here.  

Question 1

Our church has a youth minister who is paid a salary of $40,000. As part of their duties, they will attend a week-long (six days) church camp out of state, supervising youth during the summer or perhaps a mission trip with the youth (4 days). They are on call 24 hours a day for emergencies and supervise the youth during the entire time of the camp or mission event. What must the youth minister be paid? Can they be given compensatory time off in lieu of overtime? The youth minister normally works 35 hours per week.

A: For such a specific question, you should reach out to the Department of Labor.

Call or visit the nearest WHD Office

• Visit the WHD homepages at: https://www.dol.gov/agencies/whd
• The WHD toll-free information and helpline at 1-866-4US-WAGE (1-866-487-9243)

In general, if it is determined that the youth pastor qualifies as an exempt employee (all three qualifications need to be met- salary threshold, salary basis, and duties test), then you are allowed to let him comp his time. 

If this employee is non-exempt and is “on-call” outside of regular working time, then usually, wages are paid when he is called to work. Some companies pay an additional “on-call” payment to their employees in addition to the hours worked. 

Question 2

Why wouldn’t a highly compensated employee be exempt simply because they earn more than $684…why is there a second level?

A: I don’t know the reasoning behind the government’s creation of this rule, but if I had to guess, they were trying to prevent someone from receiving high compensation without working.  For example, an owner’s wife is on payroll to receive money but never steps foot in the business. To be exempt from overtime, all three levels need to be met – salary level, salary basis, and job duties.

Highly Compensated Employees (as of July 1, 2024)

The regulations contain a special rule for “highly compensated” employees who are paid total annual compensation of $132,964 or more. A highly compensated employee is deemed exempt under Section 13(a)(1) if:

• The employee earns a total annual compensation of $132,964 or more, which includes at least $844 per week paid on a salary or fee basis;
• The employee’s primary duty includes performing office or non-manual work and
• The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee.

Thus, for example, an employee may qualify as an exempt highly compensated executive if the employee customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements in the standard test for exemption as an executive.

Question 3

If someone under the new salary cap is not a full-time employee (they work 30 hours/week), would they get overtime pay over 40 or 30 hours?

A: 40 hours plus is the overtime threshold.

Question 4

Are salaried employees required to take a lunch break?

A: No, salaried employees are not required a lunch break under federal law.

Question 5

Do you believe that this will get tied up in the courts before the 1st of either July 1st or 1/1/25?

A: We do not know – we would find as soon as the public does. As of today, there is still no word.

Question 6

Are there some exceptions to being under the FLSA for certain nonprofit organizations?

A: Depends on what the organization is doing – run it by the DOL office.

Question 7

If an employee falls under one of the “exempt” categories, then they don’t have to have their salary adjusted to over the threshold? And if that is true, would an interior designer be considered a “Creative Professional”?

A: Yes – an interior designer would most likely be considered a creative professional; contact the office for further details

Question 8

If I have a facility director who makes under the $684 per week test but is salaried, this staff member would NOT be exempt from overtime, correct? Yes, that is correct. Another example: If I have a teacher who makes under the $684 per week test but is salaried, this staff member would be exempt from overtime, correct?

A: Teachers are exempt; Correct, under $684 would not be exempt.

Question 9

Will you be sharing the formula for total compensation?

A: Commissions, incentive pay, or non-discretionary-bonuses can only be 10% of the threshold – the employer needs to pay 90% of the threshold.

Question 10

Do church employees have to make the min. salary?

A: It would have to be specifically looked at, being it is a nonprofit

Many nonprofit organizations are covered by the FLSA. The final rule may impact nonprofit organizations with an annual volume of sales or business done of at least $500,000. In determining coverage, only activities performed for a business purpose are considered. Charitable, religious, educational, or similar activities of organizations operated on a nonprofit basis where such activities are not in substantial competition with other businesses are not considered. Employees of employers who are not covered by the FLSA on an enterprise basis may still be entitled to its protections if they are individually engaged in interstate commerce.

The Department’s EAP regulations have never had special rules for nonprofit or charitable organizations, and employees of these organizations are subject to the EAP exemption if they satisfy the same salary level, salary basis, and duties tests as other employees.

Question 11

Will employees need to punch a time clock?

A: The employer has record-keeping responsibilities once the employee is considered exempt.

Employees entitled to overtime pay are not required to punch a time clock. The FLSA requires that employers keep certain records for each nonexempt employee so those workers can be sure that they get paid what they earn and are owed, including time and one-half of their regular rate of pay when they work more than 40 hours in a workweek. Employers have options for accounting for employees’ work hours, some of which are very low-cost and burdensome. There is no particular form or order of records required, and employers may choose how to record hours worked for overtime-eligible employees. For example, when an employee works a fixed schedule that rarely varies, the employer may simply keep a record of the employee’s regular schedule and then record any variations from that schedule (“exceptions reporting”).

https://www.dol.gov/agencies/whd/fact-sheets/21-flsa-recordkeeping

Question 12

Can I require my salaried EE’s who don’t hit the salary threshold to track hours on paper and submit that tracking weekly?

A: If you have a record, that will work –

Unlike other employees, employers are not required to keep records related to the daily or weekly work time performed by employees who are exempt employees. However, employers must still keep certain records related to the identity and payment of these employees, as described in the Department’s recordkeeping regulations at 29 CFR part 516.

Question 13

What about for seasonal employees? Are there particular rules for them?

A: It might depend on the specific seasonal work – but don’t know of anything specific related to seasonal employees.

Question 14

Regarding exempt, there is some flexibility with employees such as working more or less than 40 hours to perform a job. If they revert to hourly, that flexibility is lost, correct?

A: They can work more or less than 40 hours, they will just need to be paid overtime for anything over 40 hours

Question 15

Does our first payroll of July, July 3, have to be paid at the new, salary rate even though the dates paid are for June 20-26? Or are the dates worked in July the beginning of the new, salary rate? Thus, our first new, salary rate paid out on July 11th, our second payroll of the month?

A: The latter would be correct. The dates worked starting in July would be affected by the new salary threshold.  The dates worked in June would still be subject to the current pay requirement.