On Tuesday, September 25, 2019, the United States Department of Labor released the final rule raising the minimum salary an employee must make to be exempt from overtime pay. As a result, more salaried employees will be eligible for overtime compensation. The Department has provided new thresholds to account for growth in employee earnings since the currently enforced thresholds were set in 2004. In 2016, the Department of Labor under the Obama Administration attempted to significantly raise the thresholds for overtime pay, but their efforts were blocked in federal court before they could be implemented. Consequently, the new rulemaking will be the first change in federal overtime thresholds in over fifteen years.
Effective January 1, 2020, the minimum salary necessary for an employee to be exempt from overtime will be raised from the current $455 per week ($23,660 annually) to $684 per week ($35,568 annually). The new limit of $684 per week represents the 20th percentile of earnings for a full time, full-year salaried worker in the South (the lowest wage region) and/or the retail industry (based on pooled data). Additionally, the final rule also raises the minimum salary necessary for an employee to be exempt from overtime as a “highly-compensated employee,” raising the amount from $100,000 annually to $107,432 annually. The new threshold is set at the 80th percentile of earnings of all full-time employees nationally. More information about the overtime threshold changes can be found in the Department of Labor Fact sheet displayed in this link.