DOL Issues Final Rule on Changes to Overtime Exemptions

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All Employers Subject to the FLSA

EFFECTIVE

January 1, 2020

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The U.S. Department of Labor (DOL) recently issued the final rule updating the salary requirements for overtime exempt classifications. For executive, administrative, professional, and computer professional exemptions, the salary threshold will increase from $455 to $684 per week (equivalent to $35,568 per year). Where state overtime exemptions are more strict, the federal rule will not impact those jurisdictions.

The highly compensated employee exemption will rise from $100,000 to $107,432 per year. This exemption will not impact those state jurisdictions, like California, who do not recognize the highly compensated employee exemption.

Additionally, employers will be allowed to use nondiscretionary bonuses, incentive payments, and commissions that are paid at least annually, to satisfy up to 10% of the standard salary level. However, this allowance does not apply to highly compensated employees, and may not be allowed under applicable state rules. Notably, there were no changes to the duties tests for the overtime exemptions.

Employers should begin to prepare for implementation of the rule by reviewing the duties and salaries of those who are currently identified as exempt, and for those employees who employers may want to transition to non-exempt status.

Action Items

  1. Read the final rule here.
  2. Review employee exempt statuses and prepare for either status or pay adjustment.
  3. Have managers and payroll administrators trained on the new requirements.
  4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2019 ManagEase

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