U.S. Department of Labor Issues Final Overtime Rule

Sets Salary Threshold of $35,568 per yearOn September 24, the U.S. Department of Labor (DOL) announced a final rule updating the earnings thresholds necessary to exempt executive, administrative, or professional employees from the Fair Labor Standards Act (FLSA) minimum wage and overtime pay requirements and allowing employers to count a portion of certain bonuses (and commissions) towards meeting the salary level. The final rule includes many of AGC’s policy recommendations.  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 non-discretionary 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.

The final rule will be effective on January 1, 2020. A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further rule making regarding a revised salary threshold. More information about the final rule is available here.