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Overtime rule change

Overtime rule change

By on Oct 1, 2019 in Blog, Compensation Consulting, Compliance, HR Consulting | 0 comments

On September 24, 2019, the US Department of Labor announced a final rule to make 1.3 million additional American workers eligible for overtime pay.

The final rule updates the earnings thresholds necessary to exempt executive, administrative and professional employees from the Fair Labor Standards Act’s [FLSA] minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses/commissions towards meeting the salary level. The new thresholds account for growth in employee earnings since the thresholds were last updated in 2004.

In the final rule, the Department is:

  • Raising 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-year worker];
  • Raising the total annual compensation requirement for ‘highly compensated employees’ from the currently enforced level of $100,000 per year to $107,432 per year;
  • Allowing employers to use nondiscretionary bonuses and incentive payments [including commissions] paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
  • Revising the special salary levels for workers in U.S. territories and the motion picture industry.

Regarding the first bullet…this means that any employee earning $35,568 or less per year will be eligible for overtime.  At the federal level this is time and one-half for any hours over 40 worked in a given week.  Your state or even your municipality may have different overtime rules.

The final rule is effective on January 1, 2020.

The Federal Register notice of the final rule can be found here.

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