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Sep 24 2019

U.S. Department of Labor Increases Overtime Threshold Limit for “White Collar” Workers

By: Reese Mitchell

Posted in: Fair Labor Standards Act

 

Today, the United States Department of Labor has issued a final version of the federal overtime exemption rule under the Fair Labor Standards Act (“FLSA”) for salaried “white-collared” workers. This has been a closely monitored issued since 2014 when the Obama administration first attempted to increase the salary threshold to $47,476. The newly announced rule does not go as far as the proposed 2014 rule.

As of January 1, 2020, standard salary level employees who have yearly salaries of $35,568 or $684 per week or more will qualify for the FLSA’s overtime exemption for executive, administrative, and professional workers. This is an increase from the current $23,660 per year salary requirement. In recognition of changing compensation practices, the Department of Labor is allowing employers to use non-discretionary bonuses and incentive payments, including commissions, that employers pay at a minimum annually to satisfy up to 10 percent of the standard salary level.

In addition, the new rule raises the exemption compensation requirements for so-called “highly compensated workers,” well-paid workers who perform some managerial duties, from $100,000 to $107,432.  The “highly compensated workers" exemption is different from the “executive employee” exemption because, unlike “executive employees,” the management of the enterprise or recognized department of is not their primary duty, and they generally do not have authority or input to fire and hire other employees.  The application to “highly compensated workers” only has relevance outside Connecticut, as our own State minimum wage and overtime law does not recognize the highly compensated exemption. 

The increase in the earning thresholds necessary to exempt these “white-collar” workers is the result of the growth in employee earnings since the Bush administration set the current thresholds in 2004. DOL estimates at least 1.3 million American employees will be eligible for overtime pay under the FLSA. According to Acting U.S. Secretary of Labor Patrick Pizzella, “This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.” 

If you have any questions or concerns whether the DOL’s new rule will affect either yourself or any of your employees, please contact one of the attorneys at Mitchell & Sheahan, P.C. 


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