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The United States Department of Labor (“DOL”) issued a
long-awaited proposed overtime rule and new exemption threshold under the Fair
Labor Standards Acts (“FLSA”) on March 7, 2019.
The proposed rule raises the salary threshold for overtime eligibility
from $23,660.00 to $35,308.00, or $679.00 per week. As such, employees earning under $35,308.00 a
year must be paid overtime for hours worked in excess of 40 each week. Above this salary level, eligibility for
overtime varies based on job duties.
For highly compensated employees, the DOL raised the salary
threshold from $100,000.00 to $147,414.00.
To help offset the increased salary threshold, the proposed rule allows
employers to use nondiscretionary bonuses and incentive payments, including
commissions, which are paid annually to satisfy up to 10% of the standard
salary level.
Importantly, the proposed rule does not make any changes to
the FLSA’s job duties test that determines whether an employee is exempt. Additionally, there are no changes in
overtime protections for police officers, fire fighters, paramedics, nurses,
non-management production line employees and non-management employees in
maintenance, construction and other similar occupations.
The DOL estimates the proposed rule will impact
approximately 1.1 million workers. The
proposed rule is expected to take effect in January 2020, after a 60-day public
comment period.