Updates to Overtime Rule Finalized by U.S. Department of Labor

The U.S. Department of Labor (DOL) recently issued a final update of the rule governing overtime pay for eligible American workers under the Fair Labor Standards Act (FLSA). This is the first time that regulations in this area have been updated in more than a dozen years. The updated rule goes into effect on January 1, 2020.

The update seeks to account for growth in employee earnings since 2004, when the rule was first established. Details of the final rule updates include:

  • An increase in the “standard salary level” (from $455 to $684, weekly)
  • An increase in the total annual compensation level for “highly compensated employees” (from $100,000 to $107,432)
  • A new allowance that lets employers use nondiscretionary bonuses and incentive payments to account for up to 10 percent of the standard salary level
  • A revision of the special salary levels for both workers in U.S. territories and those in the motion picture industry

The reasoning behind these updates is a desire to bring regulation levels up to date with the wage and salary growth that has occurred over the last 15 years, as well as to compensate for evolving pay practices. The DOL estimates that this update will result in an additional 1.2 million workers becoming entitled to minimum wage and overtime pay. For more details, see the news release from the U.S. DOL at dol.gov.