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DOL Issues Final Overtime Rule

In a previous AJM BLOG, we advised on the proposed new overtime rule announced on March 7, 2017, by the Department of Labor (DOL).

On Tuesday, September 24, 2019 the DOL released its finalized overtime rule, raising the minimum salary level to $35,568 per year ($684 per week) to earn overtime wages.

When does this take effect?

The final rule takes effect on January 1, 2020 and updates the earnings threshold to exempt executive, administrative or professional employees from the FLSA's minimum wage and overtime pay requirements. In addition, it allows employers to count a portion of certain bonuses and commissions toward meeting the salary level.

What is in the final rule?

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 (HCE)" from the currently-enforced level of $100,000 to $107,432 per year;

  • allowing employers to use non-discretionary 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.

What employers should do?

Employer who have not already reviewed their exempt workforce should do so now, before the January 1, 2020 effective date. They can:

  1. Opt to pay overtime

  2. Raise salary levels above $35,368

  3. Tighten policies to ensure employees do not work more than 40 hours per week

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