DOL Announces Increased Salary Levels for White Collar Overtime Exemptions

Cozen O'Connor

Cozen O'Connor

On Tuesday, September 24, 2019, the U.S. Department of Labor released its much anticipated update to the regulations setting the thresholds for the executive, administrative, and professional (EAP) employee overtime exemptions.

As expected, the final rule raised the “standard salary level” from $455 to $684 per week ($35,568 per year). The rule also raised the total annual compensation level for “highly compensated employees” (HCEs) from the current level of $100,000 to $107,432 per year — far less than the $147,414 proposed earlier this year. The final rule will also allow employers to pay nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually, to satisfy up to 10 percent of the standard salary level. Additionally, under the revised regulations, if an employee’s yearly earnings (salary paid in a 52-week period, plus any nondiscretionary bonuses and incentive payments, including commissions) fall short of the required levels to maintain their exempt status, employers will be able to make a “catch up” payment of up to 10 percent of the standard salary level within one pay period following the end of the 52-week period.

Employers intending to invoke or maintain the EAP employee overtime exemptions have the remainder of this year to make necessary adjustments, as the final rule is set to go into effect January 1, 2020.

The full text of the 245-page final rule can be read here. The Department of Labor’s “Fact Sheet” summarizing the final rule can be read here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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