U.S. Department of Labor Announces Final Rule for Overtime

The United States Department of Labor (DOL) has announced a final rule for an expansion of overtime protections on September 24, 2019. This rule marks an update to the overtime rule announced in 2016. The final rule is effective starting January 1, 2020.

The DOL’s final rule updates and revises the overtime regulations under the Fair Labor Standards Act to change the earnings thresholds necessary to exempt executive, administrative and professional employees along with several other items. Under the final rule:

1. The minimum salary threshold will be increased from the current level of $455 per week to $684 per week ($35,568 per year).

2. The annual compensation requirement for “highly compensated employees” will be increased from the current level of $100,000 to $107,432 per year.

3. Employers are allowed to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the minimum salary amount.

4. Special salary levels for workers in U.S. territories and the motion picture industry were revised.

Additionally, Governor Wolf had announced plans to change Pennsylvania’s overtime rules, which were established in 1977. The proposal included a phased-in increase of the minimum salary threshold from $23,600 per year to $35,568 on January 1, 2020, $40,560 on January 1, 2021, and $45,500 on January 1, 2022.