The U.S. Department of Labor (DOL) this week published its much anticipated (and controversial) final rule on overtime eligibility for salaried white collar employees. Most significantly, the rule increases the current salary threshold for determining whether an employee is entitled to overtime pay from $455 per week (equivalent to $23,660 per year) to $684 per week ($35,568 per year). The final rule closely tracks the proposed rule published for public comment earlier this year.
Under the new rule, which goes into effect on January 1, 2020, any salaried employee making less than $35,568 will be automatically entitled to overtime pay regardless of the worker’s duties, unless another exemption applies. DOL estimates that under the new rule, an additional 1.3 million workers who are currently classified as exempt will be reclassified as nonexempt and will be entitled to overtime pay or to have their pay adjusted to meet the new minimum salary level. The rule also adjusts the minimum salary level required under the optional Highly Compensated Employee (HCE) test from $100,000 to $107,432.
Importantly, the final rule does not include any provision to automatically adjust the salary levels upwards, or any revisions to the current “duties” tests for determining whether a person qualifies as an overtime-exempt executive, administrative, or professional employee, in other words.
As was the case with the proposed rule, the final rule allows employers to include nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the minimum salary requirement.
Members of the Center for Workplace Compliance (CWC) can read more here.