Client Alerts, News Articles & Blog Posts

Everything you need to know about BMD and the industry.

CLIENT ALERT: New Overtime Rule Raises Minimum Salary Requirements and Other Changes to the Fair Labor Standards Act

Today, the U.S. Department of Labor (DOL) issued its Final Rule updating the regulations under the Fair Labor Standard Act:

Effective January 1, 2020, employees who make less than $35,568 are now eligible for overtime pay under a final rule issued by the U.S. Department of Labor (“DOL”). The DOL expects 1.3 million workers to become newly eligible for overtime by updating the thresholds.  The new rule will raise the salary threshold to $684 per week ($35,568 annualized) from $455 per week. This means that even if your employee qualifies under one of the overtime exemptions, if the employee is not earning at least $684/week, the employee will be eligible for overtime and minimum wage requirements.

The new rule which revised the regulations issued under the Fair Labor Standards Act (FLSA) is expected to prompt employers to reclassify exempt workers to nonexempt status and raise the pay for others above the new threshold. 

In addition to raising the salary threshold for exempt workers, the new rule raised the threshold for highly compensated employees from $100,000 a year to $107,432 a year for full-time salaried workers. This means that employees classified as highly compensated for purposes of obtaining overtime exemption will now need to be paid at least $107,432/year.

The Final Rule also allows employers to use non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices.

How does this affect Employers?

In order to comply with the Final Rule, employers will need to consider a few different options for employees classified as exempt but earn less than $684/week. Employers must review their roster of current exempt earners and, if they earn less than $684/week, the employers must implement one of the following options:

  • Beginning January 1, 2020, employers can remove the exemption status from these employees and begin paying overtime for all hours worked over 40 hours per week.

 OR

  • Beginning on January 1, 2020, employers can remove the exemption status from these employees, forbid overtime, and hire or reassign additional employees to cover any increase in workflow.

OR

  • Beginning on January 1, 2020, employers can increase the salaries of these employees to meet the minimum salary threshold of $35,568/year and at least $684/week, thus qualifying them for the overtime exemption.

Employers must weigh the cost of raising employee salaries above the new threshold against the cost of reclassifying employees as nonexempt and paying overtime. 

The ultimate decisions made by the employer should be strongly considered as any change in employee classification or reorganization of employee structure may impact employee morale. In addition, we view the “duties test” as even more important for employees whose salaries are on the border of the revised threshold. For these employees, it is now more important than ever before that employers ensure correct exemption classification and, if employers ultimately discover improper classifications, they should use this time as an opportunity to reclassify the exemption status for these employees.

If you have any questions about the changes to the Fair Labor Standards Act’s minimum salary requirements to qualify for overtime exemption status, as discussed in this Client Alert, or labor & employment, generally, please do not hesitate to contact one of the following members of the Brennan, Manna & Diamond’s Labor & Employment Team:  In Akron contact: John N. Childs at (330) 253-1946, Adam D. Fuller at (330) 374-6737, Richard L. Williger at (330) 253-3770, or Bryan E. Meek at (330) 253-5586, or Jeffrey C. Miller at (216) 658-2323 in our Cleveland Office; or John Gast (239) 992-1841 in our Bonita Springs, Florida Office; or Cody L. Westmoreland at (904) 366-2326 and Erin R. Whitmore at (904) 366-2324 in our Jacksonville, Florida Office.

CLIENT ALERT: Proposed New Rules to both the Stark Law and the Anti-Kickback Statute

On October 9, 2019, as part of the “Regulatory Sprint to Coordinate Care,” the Centers for Medicare and Medicaid Services (“CMS”), along with the US Department of Health and Human Services, Office of Inspector General (“OIG”), proposed new rules to both the physician self-referral law (“Stark Law”) and the Anti-Kickback Statute (“AKS”). Rule changes are aimed at fostering innovative arrangements for coordinating care consistent with a shift to a value-based system. Both proposed rules are expected to be published to the Federal Register on October 17, 2019. Public comments are due 75 days after publication.

CLIENT ALERT: BWC issuing $1.5 billion in premium refunds to Ohio employers

The Ohio Bureau of Workers’ Compensation (BWC) has now reported that the Board of Directors approved a proposal to send $1.5 billion of the agency’s revenues to Ohio employers covered by the BWC system.

CLIENT ALERT: Medicare Providers having multiple locations should verify and revalidate their address information to avoid claim denials

MLN Matters SE19007 “Activation of Systematic Validation Edits for OPPS Providers with Multiple Service Locations” notifies providers that Medicare is now requiring the exact match of all addresses for practice locations that are listed on provider claim submissions to Medicare.

CLIENT ALERT: Capitalizing on New Opportunity Zone Incentives to Spur Economic Development

CLIENT ALERT: New Opportunity Zone Incentives Promise to Spur Economic Development

CLIENT ALERT: HB 159 - Regulatory Indemnity Provisions in Public Works Design Contracts

Representative Louis W. Blessing III (R-Colerain Township) recently introduced HB 159 to regulate the use of indemnity provisions in professional design contracts related to public improvements. The purpose of the proposed legislation is to prohibit public agencies from requiring design professionals to indemnify them from claims which are not attributable to negligent or other wrongful conduct on the part of the design professional.