Final Rule: Overtime Update

On September 24, 2019, the U.S. Department of Labor finally announced (after multiple threshold considerations) a final rule to make 1.3 million American workers newly eligible for overtime pay.

This 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. This means anyone below that threshold is considered non-exempt (eligible for overtime pay).

In the final rule, the Department of Labor is:

• 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).
• 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. 
• Allowing employers to use non-discretionary 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.
• Revising the special salary levels for workers in U.S. territories and the motion picture industry.

This final rule comes into effect on January 1, 2020, and you need to make sure your organization is prepared. Now is a great time to review employee classifications for compliance, especially as improper classifications can result in penalties and fines, including back wages and overtime payments; something that can be easily avoided.

Have questions about the rule, or your employee classifications? We are here to help! Contact us at insource@insourceservices.com or (781) 235-1490.