On September 24, 2019, the U.S. Department of Labor (DOL) announced a final rule to make over a million American workers newly eligible for overtime pay. The final rule updates the earnings thresholds necessary to exempt executive, administrative, or professional employees from the FLSA’s minimum wage and overtime pay requirements and allows employers to count a portion of certain bonuses and commissions towards meeting the salary level. The new thresholds account for growth in employee earnings since the current thresholds were set in 2004. In the new rule, DOL is:
- raising the “standard salary level” 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, in recognition of evolving pay practices; and
- revising the special salary levels for workers in U.S. territories and in the motion picture industry.
This comes about 3 years after a 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further rulemaking regarding a revised salary threshold. As the 2016 final rule was invalidated, DOL has consistently enforced the 2004 level throughout the last 15 years. More information on the new overtime rule can be found here. The new rule will be effective on January 1st, 2020.