US Department of Labor Issues Final Overtime Rule
The U.S. Department of Labor issued a final rule, effective Jan. 1, 2020, to make 1.3 million American workers eligible for overtime pay under the Fair Labor Standards Act.
"For the first time in over 15 years, America's workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans," says Patrick Pizzella, acting U.S. secretary of labor. "This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers."
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—toward meeting the salary level. The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In the final rule, the Department 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" 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
- revising the special salary levels for workers in U.S. territories and in the motion picture industry.
The Department estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level. The Department also estimates that an additional 101,800 workers will be entitled to overtime pay as a result of the increase to the highly compensated employees compensation level.
More information about the final rule is available here.