September 2019

As we discussed a few weeks back, the Department of Labor (DOL) released today its final rule that will require businesses to pay overtime wages to a much larger group of employees. The final rule now sets the minimum salary threshold for overtime eligibility at $35,568.

The regulations implement the Fair Labor Standards Act (FLSA)’s overtime mandate and will make an estimated 1.3 million additional U.S. workers eligible for overtime pay. The final rule will be effective Jan. 1, 2020. The threshold is slightly higher than the $35,308 proposed in the initial draft of the rule and will also allow employers to count non-discretionary bonuses, incentives and commissions as up to 10% of an employee’s salary level, as long as those bonuses are paid annually.

The FLSA’s exemption threshold for highly-compensated employees will be set at $107,432, which is lower than in DOL’s initial draft but still higher than the previous threshold of $100,000.

The agency has not set a time frame for automatic updates to the overtime eligibility threshold beyond what is included in the final rule. The rule will not make changes to the FLSA’s “duties” test.