The DOL says the increase in the minimum salary floor will boost wages for 1.3 million U.S. workers. For employers: Nondiscretionary bonuses can count for up to 10 percent of that threshold.
The Department of Labor Tuesday morning released its long-awaited final overtime rule, increasing the salary threshold to $684 per week (up from the current $455 per week floor), or $35,568 per year on an annual basis. The revisions to the “white collar” exemptions (which preclude executive, administrative, or professional employees from coverage under the FLSA’s overtime requirements) mean that 1.3 million additional employees will become eligible for overtime, according to the DOL. The compensation level for “highly compensated employees” will also rise, from the currently enforced level of $100,000 to $107,432 per year.
There is something for employers to like: “[I]n recognition of evolving pay practices,” the DOL will for the first time permit employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level.
“This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers,” said Acting U.S. Secretary of Labor Patrick Pizzella, in a statement announcing today’s rulemaking.
The DOL has released a fact sheet noting the key provisions of the revised rule, which has not yet been published in the Federal Register.
The battle of the commentators already has begun. Chairman Bobby Scott (D-Va.) of the House Education and Labor Committee remarked, “The Department of Labor’s new overtime salary threshold is a step in the right direction, but it fails to cover millions of middle-class workers who would have been eligible to receive overtime pay under the Obama administration’s 2016 rule. Under that 2016 rule, the overtime salary threshold would have been about $51,000 in 2020. Rather than defending the Obama-era rule against a frivolous legal challenge, the Trump administration has written a new rule that assumes people making $35,000 a year are highly paid executives who do not need overtime protections.
Virginia Foxx (R-NC), Ranking Member of that same committee, countered, “The DOL rule is a responsible, reasonable, and workable solution that will update outdated salary levels and increase the number of workers eligible for overtime pay, while providing needed clarity to America’s job creators. This is just the latest example of how Republican pro-growth policies are providing American workers, job creators, and their families with opportunities for success.”
The regulation will take effect January 1, 2020.
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