On September 24, 2019 the U.S. Department of Labor (DOL) issued a revised Final Overtime Rule increasing the minimum salary threshold for overtime exemption to $35,568. The Final Overtime Rule takes effect on January 1, 2020.

The DOL’s Final Overtime Rule increases the weekly salary threshold for minimum wage and overtime exemption under the Fair Labor Standards Act (FLSA) from $455 to $684 (an increase in the annual minimum salary from $23,600 to $35,568). The Final Overtime Rule also increases the minimum annual exemption salary threshold for highly compensated employees (HCEs) from $100,000 to $107,432.

The minimum salary thresholds for FLSA exemption under the DOL’s Final Overtime Rule differ slightly from those the DOL previously proposed in March 2019. The DOL’s Final Overtime Rule increases the minimum weekly salary threshold from a proposed $679 to $684, and decreases the minimum HCE annual exemption salary threshold from a proposed $147,414 to $107,432.

As expected, the DOL’s Final Overtime Rule allows employers to count certain nondiscretionary bonuses and incentive payments (including commissions) as up to 10 percent of an employee’s standard salary level, so long as the additional payments are made at least annually. Accordingly, employers can bump up an employee’s earned salary with a bonus to meet the minimum salary standard. The Final Overtime Rule also revises designated salary levels for employees in the motion picture industry and employees working in certain U.S. territories. The salary thresholds under the DOL’s 2020 Final Overtime Rule will update every four years following a notice and comment period.

Employers have the remainder of 2019 to comply with the DOL’s Final Overtime Rule.

Drinker Biddle will provide detailed information regarding the Final Overtime Rule in future blog posts. The full text of the Final Overtime Rule is available on the DOL website at www.dol.gov/whd/overtime2019/.