The Department of Labor has finalized the overtime rules which will make 1.3 million more American workers eligible for overtime pay under the Fair Labor Standards Act and may make an additional 101,800 workers eligible for overtime pay due to increased highly compensated employee levels. The last time the overtime rule threshold was updated was in 2004.
The final rule is set to be effective on January 1, 2020 and updates the earnings threshold from $455 ($23,660 annually) per week to $684 per week or an equivalent of $35,568 per year for a full-year worker. It also raises the total annual compensation level for “highly compensated employees (HCE)” from the current amount of $100,000 to $107,432 per year. The final rule also allows 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 and revises the special salary levels for workers in U.S. territories and in the motion picture industry.
The DOL did not change the duties test for determining whether an employee who earns more than the salary threshold is exempt from overtime pay. The agency will update the overtime pay rule more regularly going forward.