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Image: DOL Overtime Rule

Finally Final: US Department of Labor Publishes Overtime Rule

By January 1, 2020, employers must implement the new overtime threshold for employees that earn less than $684 per week ($35,568 per year) and work more than forty (40) hours in a workweek. As of January 1, to be exempt from overtime pay requirements pursuant to the Fair Labor Standards Act (“FLSA”), employees must be paid on a salary basis at or above $35,568 per year and meet certain job requirements related to their primary job duties. The job duty requirements remain unchanged in the new, final rule.

In the final rule, which was announced on September 24, 2019, the U.S. Department of Labor allows employers to use non-discretionary bonuses and incentive payments paid at least annually (such as commissions) to satisfy up to ten percent (10%) of the standard salary level. Additionally, employees that do not meet the job duty requirements for the administrative, executive, professional, outside sales and computer employee exemption but make more than $35,568 are only eligible for overtime if they earn less than the new threshold for “Highly Compensated Employees” (“HCE”). That figure is $7,432 higher than the current threshold of $100,000 but well below the originally proposed threshold of $147,414. If an employee meets the job duty requirements to qualify as an HCE but makes more than $107,432 per year, among other requirements, he or she is exempt from overtime as an HCE. Whether an employee meets the HCE job duty requirements is a complicated analysis and warrants consultation with your Employment Attorney.

The salary threshold was last updated in 2004 when it was set at $23,660 (and $100,000 for HCE). During the Obama Administration, a proposed rule to increase the salary threshold to $47,000 per year was struck down by a federal court in Texas. Now, almost four (4) years later, employers finally have certainty with regards to federal requirements. Employers should consider the impact of this rule when conducting end-of-year reviews and compensation increases for employees in the 2020 calendar year.

If you have questions or concerns regarding your obligations as an employer under the FLSA, please do not hesitate to contact an Employment Law Attorney at Stock and Leader.

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