US Department of Labor Hands Down Changes on Overtime
According to state statute, Maine “recognizes exemption from overtime for people working in a ‘bona fide executive, administrative or professional capacity’ and requires that employers pay a salary according to the requirements of the Federal Fair Labor Standards Act (FLSA).” Maine’s mandated minimum wage increases affect the overtime salary threshold, however.
Maine and federal law use a similar test to determine if an employee is exempt from the overtime provisions of the law.
- The employee must be paid on a salary basis. This means an employee regularly receives a predetermined amount of compensation each pay period.
- The salary must exceed a certain salary threshold. In Maine, this salary threshold is currently $33,000, however, it becomes $36,000 on January 1, 2020 with the mandated minimum wage increase. (See below.)
- The employee’s job duties must meet certain tests. There are slightly different tests for the administrative, professional and executive exemptions.
Here is what the new federal rule change does:
- Updates the standard minimum level for salaried workers, raising it from $455 per week ($23,660 per year) to $684 per week, or $35,568 per year. Because Maine’s minimum wage increases on January 1st, 2020, our salary threshold will be $36,000 per year – higher than the federal threshold. The higher one prevails. (It is calculated by multiplying the minimum wage by 3000… $12 x 3,000 = $36,000.)
- Raises the salary minimum for highly compensated employees (HCE) from $100,000 a year to $107,432 annually, of which $684 must be paid weekly on a salary or fee basis. This should not be a major issue in Maine as we don’t have many hourly employees making $107K+/year.
- Permits employers to treat non-discretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis to satisfy up to 10 percent of the standard salary level.