DOL Rule Makes 1.3 Million Workers Eligible for Overtime Pay

On September 24, 2019, the U.S. Department of Labor (DOL) announced a final rule, effective January 1, 2020, that allows (according to the DOL) approximately 1.3 million workers to become newly entitled to overtime pay.

In a previous article, WBK discussed the notice of proposed rulemaking related to this final rule.  The final rule and the proposed rule differ in certain aspects.  Under the proposed rule, the minimum weekly standard salary level would have increased from $455 to $679 per week ($35,308 annually); the final rule increased the minimum weekly standard salary level to $684 per week ($35,568 annually).  In addition, the total annual compensation requirement needed to exempt highly compensated employees would have increased from $100,000 to $147,414; the final rule increased such amount to $107,432.

Among other items, the final rule also keeps the proposals relating to highly compensated employees that allow employers to: (i) count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard or special salary level tests if such bonuses are paid at least annually; and (ii) make a “catch-up” payment within one pay period of up to 10% of the total standard salary level for the preceding 52-week period if an employee does not earn enough in nondiscretionary bonuses and incentive payments to retain exempt status (though such payment would only count toward the prior year’s salary amount, not that of the year in which it was paid). According to the DOL’s press release, “the increases to the salary thresholds are long overdue in light of wage and salary growth since 2004,” when the current thresholds were set.  The DOL indicated that it expects to update the earnings thresholds more regularly in the future through notice-and-comment rulemaking.