Update on Department of Labor overtime rule

Today the U.S. Department of Labor (DOL) announced its long-awaited final overtime rule. The Final Rule is available on the DOL’s website here: https://www.dol.gov/whd/overtime2019/. The Final Rule increases the salary level for the white collar exemptions (executive, administrative, and professional), but at a level less than proposed by the Obama administration. Here is what you need to know:

• New salary level for white collar exemptions will be $684 per week ($35,568). Currently, the required salary is $455 per week ($23,660). The proposed rule was $679 ($35,308), and the Obama rule was $913 ($47,476).
• The new salary level for highly compensated employees will be $107,432. Currently, the required salary level is $100,000. The proposed rule was $147,414, and the Obama proposed rule was $134,004. Interestingly, the DOL’s proposed rule was much higher than the Obama rule, and a very large increase from the current level of $100K. The Final Rule scaled that back, and is much more modest–$107,432.
• There is no change to the job duties test.
• The Final Rule will not provide for automatic increases (as Obama proposed)
• The Final Rule will permit employees to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level.
• The Final Rule is effective January 1, 2020.

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