Final Rule: Overtime Update

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

The final rule, which is effective January 1, 2020, 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.

In the final rule, the Dept. of Labor 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.
  • Not changing the duties test.

Organizations must be prepared to comply with the new rule by January 1, 2020.

It is important to have an accurate timekeeping system in place, as the burden to provide accurate pay data will fall on the employer. Sullivan Group HR can assist by setting up your employees on our web-based timeclock. 

Please see the resources below for further information;

News Release:  https://www.dol.gov/whd/overtime2019/

News Release:  https://www.dol.gov/newsroom/releases/whd/whd20190924

Fact Sheet:  https://www.dol.gov/whd/overtime2019/overtime_FS.htm

FAQS:  https://www.dol.gov/whd/overtime2019/overtime_FAQ.htm

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