Oct 14

What one hand giveth the other taketh away is an idiom that best describes the United States Department of Labor’s efforts to raise the salary threshold for employees to be exempt under the FLSA’s overtime rules.  In 2016, the DOL issued its Final Rule expanding (giveth) overtime coverage to an additional 4.2 million employees; however, in 2017 a court issued a nationwide injunction barring (taketh away) enforcement of the rule. 

On September 24, 2019, the DOL has giveth once more by approving a new overtime rule.

Summary of the Final Rule

            The rule—set to take effect on January 1, 2020—will make the following changes:

  • Salary for Executive, Administrative, and Professional Workers

The salary threshold for the executive, administrative, and professional exemption will now be $684 per week (an increase from the current $455 weekly requirement).

  • Salary Threshold for “Highly Compensated” Workers

The salary threshold to meet the “highly compensated” worker exemption will now be set at $107,432 per year (an increase from the current $100,000 requirement).

  • Bonuses and Commissions

Employers can use nondiscretionary bonuses and incentive payments (including commissions), that are paid at least annually, to satisfy up to 10% of the salary threshold.

  • No Mandatory Increase is Required

The Final Rule does not have an automatic increase in the coming years.

Impacts of the rule:

The DOL estimates that approximately 1.3 million additional workers will now be eligible for overtime. As a result, employers should adjust their pay practices to ensure that any employee making less than the new salary requirements receives an increase in pay or is reclassified as nonexempt and thus eligible for overtime.