The United States Department of Labor (“DOL”) finalized a new rule that will expand current overtime protections under the Fair Labor Standards Act of 1938 (“FLSA”), which will come into effect on January 1, 2020. Specifically, the new overtime provisions will increase the salary thresholds for exempting executive, administrative, and professional employees from overtime protections.
Currently, under FLSA, to be exempt from overtime protections, an employee must be paid a “standard salary level” of $455 or more per week (or $23,660 annually) and perform certain executive, administrative, or professional job duties. See the DOL’s Fact Sheet #17A for a detailed description of these duties here.
Currently, FLSA’s overtime protections exempt “highly compensated employees” who earn at least $100,000 annually from overtime pay requirements. A “highly compensated employee” is an employee that earns the threshold salary; performs at least one of the required duties of an exempt executive, administrative, or professional employee; and earns a total annual compensation, including wages and other forms of payment, of at least $100,000.
The final rule, once in effect on January 1, 2020, will increase the “standard salary level” threshold to $684 per week (or $35,568 annually). Additionally, it will increase the “highly compensated employees” threshold to $107,432 per year. The final rule will also allow employers to use nondiscretionary bonuses and incentive payments, including commissions, paid on at least an annual basis to satisfy up to 10% of the new salary threshold.
To read the Fact Sheet about the final rule, please click here.
Authors: Matthew John Markling and the McGown & Markling Team.
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always changing like the Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.