Overtime Pay Rules Changes

The U.S. Department of Labor (DOL) approved changes to thresholds for overtime pay on September 24, 2019, under the Fair Labor Standards Act (FLSA). These changes are likely to impact approximately 1.3 million workers that may become eligible for overtime. 

Executive, administrative and professional employees may be impacted by the changes to the thresholds. Under current laws, these employees are entitled to overtime pay with annual earnings less than $23,660. Effective January 1, 2020, professional employees will be exempt from overtime rules with compensation greater than $35,568. Employees that do not work in the areas noted above, may still be entitled to overtime pay at higher earnings levels.

 The DOL will make the following changes: 

  • Increasing the standard salary level from $23,660 to $35,568 (noted above)
  • Increasing the earnings level for highly compensated employees (HCE) from $100,000 to $107,432
  • Permitting employers to use bonuses and incentive compensation to fulfill up to 10% of the standard salary level, $35,568

The effective date of these rule changes is January 1, 2020. Companies with employees earning salaries of less than $35,568, may be impacted by higher compensation costs if these employees work overtime.


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