Department of Labor Issues Final Overtime Rule

On September 24, 2019, the United States Department of Labor ("DOL") announced its final rule, which will update the earnings thresholds for “white collar” exempt employees, particularly executive, administrative and professional employees. The increases to the salary thresholds in the new rule are overdue, considering that they were last updated in 2004.

The new rule provides the following:

  • An increase in “standard salary level” from $455.00 per week to $684.00 per week (equivalent to $35,568.00 per year for a full-year worker);
  • An increase in the total annual compensation requirement for “highly compensated employees” from $100,000.00 to $107,432.00; and
  • The option for employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level.

The DOL estimates that 1.3 million additional U.S. workers will be eligible for overtime pay under this new rule, which will be effective on January 1, 2020. 

To ensure that employers are ready for the new rule’s implementation on January 1, 2020, employers should now begin to evaluate whether their exempt employees’ salaries will be impacted by the new salary thresholds. To find out more about how the DOL’s final overtime rule may impact you and your employees, please contact a Keller Thoma attorney.

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