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Department of Labor Issues New Overtime Rules

Written by: Mariel Smith, Esq.

On September 24, 2019, the Department of Labor (DOL) issued its final rule modifying the Fair Labor Standards Act (FLSA) overtime rules for executive, administrative, professional, computing positions (white collar), and highly compensated employees.

The rule goes into effect on January 1, 2020 and it increases the minimum salary that employees must be paid to qualify for the white collar or highly compensated exemptions.

What does the proposed change mean for your business?

  • The salary threshold for the white-collar exemption will increase from the current $455 per week (or $23,660 annually) to $684 per week (or $35,568 annually).
  • The salary threshold for the highly compensated will increase from $100,000 annually to $107,432 annually.
  • Employers will be permitted to count non-discretionary bonuses and incentive compensation (including commission) towards up to 10% of the white-collar salary threshold if the payments are made at least annually.
  • The new rules do not make any changes to how bonuses and incentive compensation are treated for the purposes of the highly compensated exemption.
  • The new rule will make no changes to the duties tests for the white collar or highly compensated exemptions.

What do you need to do now? 

  • Businesses with employees previously classified as exempt who will no longer meet the new salary thresholds must decide whether to reclassify the employees as non-exempt or increase salaries to reach the new thresholds.
  • Audit current overtime polices and practices.
  • Contact your company’s Labor & Employment attorney for any specific questions regarding the upcoming changes.