By SEMA Washington, D.C., Staff
The U.S. Department of Labor has issued final regulations to raise the cap from $23,660 to $35,568 a year ($455 to $684 a week) for management, administrative and professional employees who are exempt from receiving overtime pay when they work more than 40 hours a week. The pay threshold is frequently called the Fair Labor Standards Act’s “white collar” exemption. In 2016, the Obama administration raised the cap to $47,476 per year, but it was struck down by a federal court. The new rule takes effect January 1, 2020.
The $23,660 threshold was last set in 2004. The Obama administration rule included a periodic cost-of-living adjustment, but the new rule simply commits to updating thresholds on a more regular basis, acknowledging that small employers may be less able to absorb frequent new costs and workforce changes.
The new rule also raises the total annual compensation level for highly compensated employees from $100,000 to $107,432 per year. It also allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices. It is estimated that an additional 1.3 million Americans who work more than 40 hours a week would become eligible for overtime pay under the proposed rule.
For more information, visit the U.S. Department of Labor website.
Questions? Contact Stuart Gosswein at stuartg@sema.org.