DOL Issues Final Rule on Changes to Overtime Exemptions

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.

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