The Department of Labor(DOL) published the final overtime rule on September 24, 2019. The DOL is updating the earnings threshold necessary for exempt executive, administrative and professional employees from the Fair Labor Standards Act’s minimum wage and overtime pay requirements. The new overtime threshold was set at $35,568. This amount is slightly higher than the amount anticipated in the initial draft that set the amount at $35,308.
Highlights of this announcement that are effective on January 1, 2020 include:
- The minimum standard salary exempt level threshold for overtime eligibility is $35,568
- The exemption threshold for highly compensated employees is $107,432
- Employers may use non-discretionary bonuses such as commission to satisfy up to 10% of the standard salary
According to the DOL, “1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level and an additional 101,800 workers will be entitled to overtime pay.”
What employers should do now?
- Audit your exempt classifications (Remember this salary threshold is just one aspect of the rules.)
- Ensure that the employees currently receiving an exempt salary are truly exempt given the new threshold and all other requirements
- Review employees that are earning a salary less than $35,568 and determine how you want them paid starting in January 2020
- Develop an action plan, but do not act in advance of the start date (Remember the “Drill of 2016”! Those who acted in haste, learned the ruling was struck down days before the deadline.)
- Begin to immediately develop a communication plan for your employees
Should you need more clarification regarding this or any other HR matter, contact Sage Solutions Group at 734-855-7187 or visit us on the web at www.sagesolutionsgroup.com. Sage offers a free HR audit to assess your current HR health, call now to schedule!