On September 24, 2019, the U.S. Department of Labor announced a final rule to make 1.3 million American workers newly eligible for overtime pay.  The final rule updates the earnings thresholds necessary to exempt employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses/commissions towards meeting the salary level.

In the final rule, the Department raises the “standard salary level” from $455.00 per week to $684.00 per week.  To be exempt from overtime pay, a full time employee must now earn the equivalent of at least $35,568 per year (and must still meet one of the “white collar exemptions”).  Anyone earning under $684.00 per week would generally be deemed non-exempt and must be paid overtime for all time worked over 40 hours per week. 

The DOL also raised the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year.  Employers may also 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. 

The new rule is set to be effective in January of 2020.  To obtain additional information and further explanation or to discuss how these developments will affect your business, please contact one of our Employment Law attorneys at 717-390-3020.