On September 24, 2019, the Department of Labor (DOL) announced the long-awaited final rule on overtime and the salary level threshold for exempt workers. This final rule will become effective on January 1, 2020. Under the new rule, an estimated 1.3 million additional workers will be eligible for an estimated $298.8 million in overtime pay.
The DOL’s final rule:
- raises the standard salary level from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-time worker);
- allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level;
- raises the total annual compensation requirement for “highly compensated employees” (HCEs) from the currently enforced level of $100,000 per year to $107,432 per year (NOTE: Wisconsin does not recognize this exemption); and
- adjusts the special salary levels for workers in U.S. territories and the motion picture industry.
The DOL also noted that, while it did not incorporate automatic updates to the salary level, it intends to update the standard salary and HCEs total annual compensation levels on a more frequent basis in the future.
Please see the DOL’s Fact Sheet on the final rule here.
Notably, the DOL made no changes to the duties tests for exempt workers and HCEs. Please keep in mind that, to be exempt, employees must satisfy both the salaried basis test and one of the exempt duties tests.
The attorneys and HR professionals at Lake Effect HR & Law are ready and willing to assist and advise if you have questions about how this final rule may impact your workforce and pay practices. Contact us at firstname.lastname@example.org or 1-844-333-5253.