New State and Federal Overtime Rules
Most people know that hourly workers are entitled to be paid overtime under some circumstances. But two developments over the past week have shaken up the law as to who is covered by overtime laws and for what hours.
On September 18, the Minnesota Supreme Court handed down its decision in In the Matter of Minnesota Living Assistance, Inc., d/b/a Baywood Home Care. Baywood Home Care's employees worked 16-hour workdays, and Baywood paid them for 5.5 hours of each workday at one rate and the remaining 10.5 hours at 1.5 times the earlier rate, even after an employee had worked 48 hours in a week. (Note that Minnesota’s laws generally require payment of overtime after 48 hours worked in a workweek, unlike federal law, which generally kicks in at 40 hours.) The Minnesota Department of Labor and Industry determined that this was illegal under the Minnesota Fair Labor Standards Act (MFLSA) and issued an order to pay overtime and a liquidated penalty. Baywood appealed, and the case ultimately reached the Minnesota Supreme Court, which made two important rulings. First, for the purposes of the MFLSA, “all hours worked by an employee after the first 48 hours in a given workweek [qualify for overtime], regardless of how the employee was compensated during the first 48 hours of employment in the workweek.” Second, it clarified the meaning of “regular rate of pay” to make clear that time-and-a half pay is not excluded from the calculation if it is neither in excess of the 48-hour-per-week limit in statute nor outside the employee’s regular working time.
Earlier today, the United States Department of Labor issued a final overtime rule that will make 1.3 million employees either eligible for overtime pay or will limit them to a shorter work week. The rule increases the amount of money an employee must earn to be exempt from overtime rules under the most common exemptions to $35,568/year from under $23,000/year. The rule will take effect on January 1, 2020, and it is the first update to the rule since 2004. However, the rule is much less inclusive than one finalized by the Obama Administration but invalidated by a federal court—the threshold in the new rule is lower, and the new rule does not include automatic inflation/cost-of-living adjustments.
Godwin Dold offers a full suite of employment-related legal services, from litigation on behalf of employees and employers to advising to compliance auditing.