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Overtime Rule Finalized

September 24, 2019

One threshold in determining whether an employee is non--exempt or exempt under the Fair Labor Standards Act (FLSA) is the earnings threshold.  Currently, FLSA Regulations (promulgated by the U.S. Department of Labor) state that employees earning less than $23,600 per year ($455 per week) are nonexempt while Employees who earn more than $100,000 per year are almost certainly exempt.  

 

On March 28, 2019 the Department of Labor announced a proposed rule to amend the current regulations.  Today, the Department announced final regulations to take effect January 1, 2020.

 

The final rule:

  • raises 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);

  • raises the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;

  • allows 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

  • revises the special salary levels for workers in U.S. territories and the motion picture industry.

 

Disclaimer: This final rule has been submitted to the Office of the Federal Register (OFR) for publication, and is currently pending placement on public inspection at the OFR and publication in the Federal Register. This version of the final rule may vary slightly from the published document if minor technical or formatting changes are made during the OFR review process. Only the version published in the Federal Register is the official final rule.

 

March 2019 Notice of Proposed Rulemaking: Regular Rate:  https://www.dol.gov/whd/overtime/regularrate2019.htm 

 

September 2019 Final Rule: Overtime Update: https://www.dol.gov/whd/overtime2019/index.htm 

 

Ask CIP: If you have questions how this new rule may affect your company or employees, we will be happy to help.  Non-compliance with DOL regulations can result in substantial penalties.

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