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U.S. Department of Labor Issues Final Overtime Rule

September 26, 2019

The U.S. Department of Labor recently announced a final rule that updates the earning thresholds necessary to exempt executive, administrative, and professional employees from the Fair Labor Standards Act’s minimum wage and overtime requirements. It also allows employers to count certain nondiscretionary bonuses and incentive payments (including commissions) to satisfy a portion of the required salary level. In the final rule, the Department of Labor is:

  • raising the “standard salary level” for administrative, executive, and professional employees (white collar exemptions) from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raising the total annual compensation level for “highly compensated employees” (HCE) from the currently enforced level of $100,000 to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level; and
  • revising the special salary levels for workers in U.S. territories and in the motion picture industry.

The final rule will be effective on January 1, 2020. Notably, the rule does not include any automatic adjustments of these levels.

Employers should review the exemption classifications and pay rates of their employees to ensure compliance with this new law. More information on the final rule can be found HERE. Our employment attorneys are available to assist clients with compliance with this new rule.

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