Earlier this year, the U.S. Department of Labor (DOL) proposed a new overtime-pay exemption trigger, which would make more than one million American workers eligible for overtime pay under the Fair Labor Standard Act (FLSA). On September 24, 2019, the final overtime rule was issued to be effective on January 1, 2020. Below are a few significant points:
- The previously enforced standard salary level of $455/week has been raised to $684/week (or $35,568/year for a full-year worker).
- The previously enforced total annual compensation level for highly compensated employees (HCE) of $100,000 has been raised to $107,432/year.
- Nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually can be included in the compensation calculation but only to satisfy up to 10 percent of the standard salary level.
As a result, employers across industries may experience an upsurge in labor costs starting January 1, 2020. Under the newly issued final regulations, managers, assistant managers, support personnel, managerial staff members and executive chefs will be eligible for time-and-a-half pay if their annual salary is below $35,568 or $107,432 for other highly compensated employees in other professions such as lawyers and doctors. A portion of certain bonuses and commissions can be used towards meeting the salary level.
The DOL estimates that 1.3 million American workers will see an increase in their compensation under new rules.
Sources: U.S. Department of Labor and Restaurant Business.
If you have questions about how this new rule may affect your business or organization, please complete the form below.