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USDOL issues final overtime regulation update - effective 1/1/2020

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. As employers, you need to be ready. There are very few exemptions from the Fair Labor Standards Act (FLSA). If you are an employer that receives $500,000 or more per year, you are probably covered and required to follow the guidelines. The new rule is effective January 1, 2020.


Associated Industries of Missouri and our member employers complained about the previous overtime regulation that was enacted during the Obama administration, setting the minimum salary for exempt employees at $47,476 per year. Because that regulation was challenged in court, the USDOL is currently enforcing the previous 2004 threshold of $23,660 per year. The proposed new threshold enacted under the Trump administration will be $35,568; HOWEVER, employers may count certain non-discretionary bonuses and commissions. See the actual rule or the USDOL’s overtime webpage for details.


HERE’S MORE FROM THE U.S. DEPT. OF LABOR:

The final rule updates the earnings thresholds necessary to exempt executive, administrative and professional 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. The new thresholds account for growth in employee earnings since the thresholds were last updated in 2004.


In the final rule, the Department is:

  1. raising 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);

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

  3. allowing 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

  4. revising 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.


The final rule is effective on January 1, 2020.


Additional Information

  1. Final Rule

  2. News release (9/24/2019): U.S. Department of Labor Issues Final Overtime Rule

  3. Wall Street Journal (9/24/19): More Overtime Pay May Be Coming Your Way by Patrick Pizzella

  4. Fact sheet

  5. Frequently asked questions

  6. Small Entity Compliance Guide

  7. Learn more about overtime pay

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