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Department of Labor Overtime Final Ruling

On September 27, 2019, the Department of Labor issued a final rule on overtime, officially named “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” which updates and revises the “white-collar” overtime exemption regulations under the Fair Labor Standards Act. The final rule updates earnings thresholds necessary to exempt executive, administrative, or professional employees from the FLSA’s minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses (and commissions) towards meeting the salary level. The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In particular, the “standard salary level” will be raised from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker). The final rule goes into effect on Jan. 1, 2020, although there is the possibility the rule will be challenged in the courts. This is a great reminder for employers to review their wage and hours policies, and also to ensure that employees are properly characterized as salary exempt versus non-exempt (hourly). Failure to do so can result in significant exposure.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.