Overtime Pay Update: DOL Rule

The Department of Labor (DOL) announced its final rule updating the earning thresholds for exempt employees and allowing employers to count a portion of bonuses and commissions toward meeting the exempt employee salary level. The rule's effective date is Jan. 1, 2020.

The final rule raises the "standard salary level" for exempt employees from the currently enforced level of $455 per week ($23,600 annual salary) to $684 per week ($35,568 annual salary). For "highly compensated" exempt employees, the total annual compensation level is raised from the currently enforced level of $100,000 to $107,432 per year. The final rule also permits employers to use nondiscretionary bonuses and commissions that are paid at least annually to satisfy up to 10% of the standard salary level.

If an exempt employee does not meet the minimum salary threshold on Jan. 1, 2020, the exempt employee will have to be reclassified as a non-exempt employee who is eligible for overtime pay. If a county has a compensatory time policy in place, accruals of compensatory time in lieu of paying overtime are permissible.

The DOL estimates that 1.3 million American workers will be newly eligible for overtime pay by updating and revising the regulations issued under the Fair Labor Standards Act (FLSA).

See the complete Department of Labor news release.
See the Wage and Hour Division fact sheet on the final rule.

For further information on these or other HR topics, please contact your TAC Human Resources Consultant. It is recommended that you also consult your county attorney or other legal counsel. Recommendations and information provided are based on current information in the field of Human Resources. This information is not intended to be, nor should they be, construed as legal advice or legal guidance.