DEPARTMENT OF LABOR ISSUES FINAL RULE ON WHITE‐COLLAR EXEMPTION, OVERTIME PAY REQUIREMENTS
October 21, 2019
The Wage and Hour Division of the U.S. Department of Labor (DOL) has announced a final rule, effective January 1, 2020, which will modify the “white collar” overtime exemptions applicable to executive, administrative, and professional employees. The Department expects the final rule to result in more than 1.3 million employees becoming eligible for overtime compensation when it takes effect on January 1, 2020. Important changes in DOL’s final rule include:
- The standard salary level threshold will be increased from $455 to $684 per week ($35,568 annually). This figure represents an increase in the minimum salary over the current rule which was implemented in 2004.
- The highly compensated employee (HCE) total annual compensation level will be increased from $100,000 to $107,432 per year. HCEs must also receive at least the new standard salary level of $684 per week.
- Employers may apply non‐discretionary bonuses or similar incentives, including commissions, to satisfy up to 10% of the minimum salary threshold, so long as the payments are made at least annually.
- Unlike the invalidated 2016 Regulations, the final rule does not contain an automatic escalator provision. Instead, the Department proposes to adjust the salary threshold through future notice and comment rulemaking.
Employers should review existing policies and consult with their labor and employment counsel. If you have questions, please feel free to contact us.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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