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Law Alert: U.S. DOL Issues Final Rule Raising Overtime Exemption Salary Threshold to $35,568

by A. Jack Finklea, James H. Hanson, Sara L. Pettinger, David D. Robinson, Donald J. Vogel

September 24, 2019

Law Alert: U.S. DOL Issues Final Rule Raising Overtime Exemption Salary Threshold to $35,568

Back in March of 2019, we highlighted the U.S. DOL’s proposed rule on workers’ overtime-exempt status under the so-called White Collar Exemptions. Today, the DOL issued its final regulation, which, according to the DOL press release, includes: 

  • Raising the “standard salary level” from the currently-enforced $455 (the equivalent of $23,660 per year) to $684 per week (the equivalent of $35,568 per year);
  • Raising the total annual compensation level for “highly compensated employees” from the currently-enforced $100,000 to $107,432 per year; and
  • 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 contrast to the March proposal, in its final rule the DOL decided to forego the proposal that called for automatic adjustments to the salary level every four years. The DOL cited the need for flexibility as its reason for foregoing the automatic adjustments.

The new rule is set to go into effect January 1, 2020, and the DOL’s press release highlights the 1.3 million employees who currently earn a salary that lies between the old and new thresholds, proclaiming that those individuals will now receive overtime pay. Employers must, therefore, determine whether they wish to raise the salary level of their currently exempt white-collar workers to match the new threshold or instead begin paying overtime. 

For more information, please contact Scopelitis' Labor & Employment team

 

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