US Department of Labor Issues New Overtime Regulations – Effective Jan. 1, 2020

Written October 11, 2019

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The US Department of Labor has issued a final rule establishing new overtime regulations. These rules apply to all business with annual gross incomes of $500,000 or more per year. The rule states, that unless specifically exempted, employees covered by the Fair Labor Standards Act (FLSA) must receive pay for hours worked in excess of 40 in a workweek at a rate not less than one and one-half their regular rates of pay. This is referred to as "overtime" pay. Workers are exempt if they are employed in a bona fide executive, administrative, or professional capacity. This exemption from the FLSA is sometimes referred to as the "white collar" or "EAP" exemption.

The final rule updates the salary and compensation levels needed for workers to be exempt in the final rule:
• Establishes the standard salary level to $684 per week, equivalent to $35,568 per year for full-time workers. This is an increase from the current enforced level of $455 per week.
• Establishes the total annual compensation requirement for highly compensated employees (HCE) from the currently enforced level of $100,000 to $107,432 per year; and
• Allows employers to use nondiscretionary bonuses and incentive payments, including commissions, that are paid annually to satisfy up to 10% of the standard salary level.

For more information on this issue, please contact SGIA’s Government Affairs Department at govtaffairs@sgia.org.