Arizona and Flagstaff Minimum Wage Increases
Arizona’s state minimum wage once again increased; effective January 1, 2020, all non-tipped employees must be paid at least $12.00 per hour. Additionally, Flagstaff’s minimum wage increased to $13.00 per hour, effective January 1, 2020.
U.S. Department of Labor Overtime Increases and Rule Changes Affecting Overtime Calculations
Effective January 1, 2020, the new federal overtime salary threshold increased from $455 to $684 per week ($35,568 per year). Employers may use non-discretionary bonuses and incentives to satisfy up to ten percent of the standard salary level. The new overtime rule also increased the salary level for highly compensated employees from $100,000 to $107,432. Additionally, the U.S. Department of Labor (DOL) issued revised regulations, effective January 15, 2020, allowing employers to more easily offer perks and benefits to employees without affecting the employees’ overtime rates. Employers will now be able to exclude from an employee’s regular rate of pay for overtime calculations:
- Parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;
- Payments for unused paid leave, including paid sick leave or paid time off;
- Payments of certain penalties required under state and local scheduling laws;
- Reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit;
- Certain sign-on bonuses and certain longevity bonuses;
- The cost of office coffee and snacks to employees as gifts;
- Discretionary bonuses (by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples); and
- Contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.
The revised rules clarify that reimbursements not exceeding the maximum travel reimbursement under the Federal Travel Regulation or the optional United States Internal Revenue Service substantiation amounts for travel expenses are per se “reasonable payments.”
The DOL further revised the existing regulations, eliminating the restriction that “call-back” pay and other payments similar to call-back pay must be “infrequent and sporadic” to be excludable from an employee’s regular rate, while maintaining that such payments must not be prearranged. (See sections 778.221 and 778.222.)
Finally, the DOL updated its regulations pertaining to the “basic rate,” which is authorized under the FLSA as an alternative to the regular rate under specific circumstances. (See section 7(g)(3).) Under the revised regulations, employers using an authorized basic rate may exclude from overtime computation any additional payment that would not increase total overtime compensation by more than 40 percent of the higher of the applicable local, state, or federal minimum wage a week on average, for the overtime workweeks in which the employer makes the payment.
The lawyers at Faulkner Law Offices, PLLC can help employers stay compliant and can help employees ensure they are paid all wages to which they are entitled under state and federal law.