Department of Labor Proposes New Overtime Rule Raising Salary Threshold for Exempt Employees Under FLSA

On March 7, 2019, the United States Department of Labor proposed an overtime rule that would raise the salary basis threshold for “exempt” employees under the Fair Labor Standards Act (“FLSA”) from $23,660 to $35,308 per year (or from $455 to $679 per week). The rule also would allow employers to count “certain nondiscretionary bonuses and incentive payments” for up to 10 percent of a worker’s total salary amount.

Additionally, the proposal would increase the total annual compensation requirement for highly compensated employees from $100,000 to $147,414, and, likewise, would incorporate regular increases to the threshold amounts, to be instituted every four years.

Notably, the proposal does not include any modifications to the “duties test,” which is the standard used to determine whether positions are “exempt” under the FLSA’s executive, administrative, professional, or outside sales exemptions.

The Department of Labor expects the new rule to take effect in January 2020. Projections indicate that the new rule will make more than one million workers in the United States eligible to receive overtime compensation.

Contact Barb Erickson for your FLSA exemption questions.

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