Dept. of Labor’s final overtime rule sets FLSA exemption threshold at $35K

The U.S. Department of Labor released the final version of its overtime exemption rule today (Sept. 24). It sets the annual salary threshold workers need to exceed to qualify for the Fair Labor Standards Act's (FSLA) "white collar" exemptions at $35,000. The rule will take effect on Jan. 1, 2020.
 
Scheduled to be published Sept. 25 in the Federal Register, the final rule updates the FLSA’s overtime exemptions for Executive, Administrative and Professional (EAP) workers and replaces a currently enjoined rules that was finalized by the Dept. of Labor in 2016.
 
Similarly to the version proposed in early 2019, the final rule raises the salary threshold to qualify for one of the EAP exemptions to $35,568 per year or $684 per week — up from the current $23,660 annual salary. The current threshold was last updated by the George W. Bush administration in 2004 and is nearly $12,000 lower than the Obama administration's proposed $47,476 cutoff.

The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In the final rule, the DOL is:

• raising the "standard salary level" from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
• raising the total annual compensation level for "highly compensated employees (HCE)" from the currently-enforced level of $100,000 to $107,432 per year;
• allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
• revising the special salary levels for workers in U.S. territories and in the motion picture industry.

 
A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further rulemaking regarding a revised salary threshold. As the 2016 final rule was invalidated, the DOL has consistently enforced the 2004 level throughout the last 15 years.
 
More information about the final rule is available here. If you have questions and would like to confer with the LRA General Counsel for Labor & Employment Fisher Phillips, please contact the LRA Communications Dept. at 504-454-2277.