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Today the Department of Labor ("DOL") formally issued revisions to the Overtime Rule that largely mirror their proposed changes from spring 2019. The new rule sets the salary threshold for white collar exemptions at $684 per week (or $35,568 per year).
This number is revised slightly from the proposed rule from this past spring, and is the first increase -- not counting proposed changes in 2016 that were enjoined by the U.S. District Court for the Eastern District of Texas -- since 2004. As a result, the minimum salary that must be paid to qualify for the white collar exemptions will be $35,568 per year ($684 per week), up from the current minimum salary threshold of $23,660 ($455 per week). The DOL used the same methodology used in 2004, but adjusted for inflation, to determine this new salary basis.
The new rule also increases the salary basis for so-called "highly compensated employees" (employees for whom only a minimal showing is needed to establish they are exempt) from the current level of $100,000 to $107,432 per year. It also allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the required salary level. Notably, like the proposed rule, the final rule does not change any of the existing job duties tests.
According to a senior DOL official, the new regulations will make an estimated 1.3 million additional U.S. workers eligible for overtime pay. The new rule, and the new salary thresholds, take effect January 1, 2020.
The DOL press release on the new rule is available here.
If you have questions about how this new rule impacts your business, reach out to a member of Spilman's Labor & Employment Team.
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