Feds Issue Finalized Rule Aimed at Extending Overtime to More Workers

September 29, 2019

The US Department of Labor released its anticipated finalized overtime rule last week, raising the minimum salary level to $35,568 per year for a full-year worker to earn overtime wages. It is estimated that the rule will make 1.3 million workers eligible for overtime under the Fair Labor Standards Act (FLSA).

The final rule takes effect January 1, 2020, so employers should begin preparing now to ensure compliance. The rule updates the earnings thresholds necessary to exempt executive, administrative and professional employees from the FLSA’s minimum wage and overtime pay requirements and allows employers to count a portion of certain bonuses (and commissions) toward meeting the salary level.

In addition to 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), the rule raises the total annual compensation level for highly compensated employees from the currently-enforced level of $100,000 to $107,432 per year. It 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.

Read “New Overtime Eligibility Rules, DOL Increases Salary Threshold,” prepared by Barnes & Thornburg, for further details on the rule. 

Please contact Wendy Block with further questions at wblock@michamber.com.