DOL announces Final Rule, changing overtime pay under the FLSA

The U.S. Department of Labor has announced a final rule to make 1.3 million American workers eligible for overtime pay under the Fair Labor Standards Act (FLSA).

On Tuesday, the Department of Labor announced the changes to overtime pay that have not been updated since 2004.

The final rule updates the earnings thresholds necessary to exempt executive, administrative, or professional employees from the Fair Labor Standard Act’s 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 currently enforced thresholds were set in 2004.

In the final rule, the Department is: raising the “standard salary level” from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker); Raising the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year; Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and Revising the special salary levels for workers in U.S. territories and in the motion picture industry.

Acting U.S. Secretary of Labor Patrick Pizzella said in a press release that for the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans.

He says the updated rule brings a common sense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.

The final rule will be effective on January 1, 2020.