Human Capital

DOL Updates Overtime Rules

An estimated 1.3 million employees could become eligible for overtime pay under the rule.
Lauren MuskettSeptember 25, 2019

The United States Department of Labor released a final rule on overtime compensation, updating the earnings thresholds necessary to exempt executive, administrative, and professional employees from the Fair Labor Standards Act’s minimum wage and overtime pay requirements.

Under the new rule, employees who make $35,568 per year for a full-year can be exempted, up from the current $23,660. The rule will be effective Jan. 1, 2020.

An estimated 1.3 million employees could become eligible for overtime pay under the rule.

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The DOL said the moves account for growth and in earnings and evolution in pay practices. The thresholds had not been updated since 2004.

In 2016, the DOL raised the minimum salary to $47,000, however that move was challenged in federal court.

“This is an effort to find a middle ground, and while it may be challenged by either or maybe both sides, the DOL’s salary test sets a clear dividing line between employees who must be paid overtime if they work more than 40 hours per week and employees whose eligibility for overtime varies based on their job duties,” said Susan Harthill, a partner with Morgan Lewis.

Lewis said the previous court challenge had created uncertainty.

“Today’s rule is a thoughtful product informed by public comment, listening sessions and long-standing calculations,” Wage and Hour Division Administrator Cheryl Stanton said in a statement. “The DOL’s wage and hour division now turns to help employers comply and ensure that workers will be receiving their overtime pay.”

The Society for Human Resource Management said the new rule brought welcome clarity.

Richard Trumka, president of the AFL-CIO, has been critical of the scaled-back rule.