U.S. Department of Labor Issues Final OT Rule

By Karen L. Edwards, RCS Editor.

The U.S. Department of Labor (DOL) announced a final rule that will make 1.3 million Americans eligible for overtime pay under the Fair Labor Standards Act (FLSA).

In a press release issued September 24, Acting U.S. Secretary of Labor Patrick Pizzella said that this is the first update to overtime regulations for American in 15 years, stating, “This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”

Current thresholds were set in 2004 and the new final rule accounts for growth in employee earnings over the last 15 years. The rule updates the earnings threshold for executive, administrative or professional employees to be exempt from the FLSA’s minimum wage and overtime pay requirements. According to the press release, the DOL is:

• raising the "standard salary level" from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
• raising the total annual compensation level for "highly compensated employees (HCE)" from the currently enforced level of $100,000 to $107,432 per year;
• allowing employers 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, in recognition of evolving pay practices; and
• revising the special salary levels for workers in U.S. territories and in the motion picture industry.

Pizzella told Bloomberg that he is “anticipating we’ll have four rules go final and we’ll probably issue a dozen or so” prior to the September 30 end to the fiscal year. According to Bloomberg the DOL has five final regulations awaiting White House approval that would “extend financial reporting requirements to public sector mid-level union chapters; clarify tip regulations under the Fair Labor Standards Act; and give businesses more flexibility in paying overtime to workers with fluctuating schedules.”

The final rule takes effect January 1, 2020.

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