Department of Labor issues new overtime rules

On September 24, 2019, the DOL issued its final rule for new thresholds to exempt employees from overtime pay. Details can be found by clicking here. The changes will make 1.3 million more workers eligible for overtime pay. The rule goes into effect on January 1, 2020; however, expect the rule to be challenged. A few major changes created by the new rule are:

  • raising the “standard salary level” from the currently level of $455 per week to $684 per week (or $35,568 per year);
  • raising the total annual compensation requirement for “highly compensated employees” from to $107,432 per year, up from the current level of $100,000 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.

The following is a quote directly from the final rule:

“The Department estimates that in 2020, 1.2 million currently exempt employees who earn at least $455 per week but less than the standard salary level of $684 per week will, without some intervening action by their employers, gain overtime eligibility. The Department also estimates that an additional 2.2 million white collar workers who are currently nonexempt because they do not satisfy the EAP duties tests and currently earn at least $455 per week, but less than $684 per week, will have their overtime-eligible status strengthened in 2020 because these employees will now fail both the salary level and duties tests. Lastly, an estimated 101,800 employees who are currently exempt under the HCE test will be affected by the increase in the HCE total annual compensation level. The Department has not made any changes to the duties tests in this final rule.”