The Department of Labor (DOL) recently announced new rules, effective December 1, concerning overtime pay for all US employees. A summary of the changes is below, and more information about the new regulations can be found in ADP’s “New Overtime Rules” article. Because many JDJ clients are household employers, we felt it important to highlight some of these changes as they may affect them.

Increased wage threshold. Any employee who makes less than $913 per week ($47,476 annually) must be paid overtime, whether they are paid hourly or are salaried and regardless of the job description. Previously, that wage threshold was much lower – $455 per week ($23,660 annually).

Because of the kind of work they do, the DOL considers most household employees to be “non-exempt” – meaning they must be paid overtime at 1.5 times their hourly rate for hours worked in excess of 40 hours per week, no matter their rate of pay. As such, the increased wage threshold should not affect their situation. However, a domestic employee whose job description normally excludes them from being paid overtime is still subject to the $913 per week threshold.

Highly Compensated Employees. Certain household employees are classified as “highly compensated employees” because their high rate of pay makes the employee exempt from overtime, regardless of the job description. For these employees, the minimum total annual compensation required to maintain that exemption increases from $100,000 to $134,004, .

Further, these rates will no longer be static, as they have been to date. Going forward, the rates will automatically adjust every three years, based on figures gathered by the Bureau of Labor Statistics.

State employment laws may differ from federal laws and so it is important for employers to understand and comply with both. Generally speaking, while the states cannot weaken federal laws, they can (and do, in many cases) toughen them.

Because the laws are so complex, we strongly recommend that household employers get competent legal advice in matters of domestic employment. The JDJ team works closely with our clients’ legal advisors and payroll providers to ensure our clients are in compliance.