This blog post was originally published on Sept. 24, 2019 and updated on Dec. 31, 2019.
In September, the U.S. Department of Labor released its final rule that increases the salary threshold for workers in the executive, administrative and professional exemptions. The threshold increased from $455 per week (or $23,660 per year) to $684 per week (or $35,568 per year) for employees in the standard exemptions. The threshold for highly compensated employees increased from $1,923 per week (or $100,000 per year) to $2,066 per week (or $107,432 per year).
This increase made 1.3 million workers who previously did not qualify to receive overtime under the Fair Labor Standards Act eligible to receive time-and-a-half pay for hours worked in excess of 40 per week. The increase also made 101,800 highly compensated employees eligible to receive overtime.
The final rule did not change the salary basis or duties tests for the standard exemption.
FLSA firsts
This rule represents the first time the Department of Labor has allowed employers to count a portion of nondiscretionary bonuses, commissions and other incentive payments toward satisfying up to 10% of the salary threshold.
In September, the department also reinforced its commitment to raise the threshold every four years via the rule-making process, although it acknowledged economic factors may forestall a quadrennial update.
“Today’s rule is a thoughtful product informed by public comment, listening sessions and long-standing calculations,” said Cheryl Stanton, administrator for the Department of Labor’s Wage and Hour Division, upon its release. “The Wage and Hour Division now turns to help employers comply and ensure that workers will be receiving their overtime pay.”
For more information on HR compliance news, subscribe to the Paycom blog.
This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. Contact a lawyer licensed in your jurisdiction for advice on specific legal problems.
