DOL Announces Final Overtime Exemption Rule

Employment and Labor Law Tip of the Month

On March 7, 2019, the U.S. Department of Labor issued a Notice of Proposed Rulemaking (“Proposed Rule”) which sought to increase the minimum salary thresholds for the Fair Labor Standards Act’s “white collar” and “highly compensated” overtime exemptions. On September 24, 2019, the DOL announced its Final Rule. As expected, the Final Rule increases the foregoing thresholds, though to a different extent than initially proposed. Specifically, under the Final Rule, the present $455 weekly minimum salary level for exempt executive, administrative and professional employees will increase to $684 per week, i.e., $35,568 annually—a slight deviation from the Proposed Rule’s $679 threshold. 10% of the $684 may be comprised of certain nondiscretionary bonuses and incentive payments, including commissions. Regarding the highly compensated exemption, the existing $100,000 salary threshold will increase to $107,432, a substantial departure from the $147,414 set forth in the Proposed Rule. As the Final Rule becomes effective as of January 1, 2020, employers should promptly begin assessing the need for employee reclassifications, compensation modifications, or other measures that may be necessary to comply with the Final Rule.

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