Yesterday, the United States Department of Labor (DOL) announced its final overtime rule. The rule, which takes effect on January 1, 2020:
- Raises the standard salary level from $455 to $684 per week (or $35,568 per year) for the executive, administrative, and professional exemptions;
- Raises the total compensation level for the highly compensated employee (HCE) exemption from $100,000 to $107,432 per year;
- Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level; and
- Revises special salary levels for employees in U.S. territories and in the motion picture industry.
The DOL notes an intention to more regularly increase the standard salary and HCE annual compensation levels. The final rule, once effective, will mark the first update to earning thresholds since 2004. As many may recall, the DOL issued a final expansion rule in 2016 increasing salary thresholds from $455 to $913 per week and the annual compensation for highly compensated employees from $100,000 to $134,004. That rule was subsequently enjoined by the U.S. District Court for the Eastern District of Texas and invalidated. The appeal of that decision has been held in abeyance by the Fifth Circuit Court of Appeals pending further rulemaking by the DOL.
The Fact Sheet for the final rule can be found here, and the DOL’s FAQ for the final rule can be found here.