Department of Labor Rule Extends Overtime to Over a Million Workers
Thursday, September 26, 2019
Posted by: Kyle Simon
Courtesy of the National Association for Home Care & Hospice
The United States Department of Labor announced earlier this week a final rule to make 1.3 million American workers eligible for overtime pay under the Fair Labor Standards Act (FLSA). This final rule will be effective on January 1, 2020.
This final rule updates the earning thresholds necessary to exempt executive, administrative, or professional employees form the FLSA’s minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses and/or commissions towards meeting the salary level. The new thresholds account for growth in employee earnings since the current thresholds were set in 2004.
According to this final rule, the Department of Labor will:
- Raise 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);
- Raise the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year;
- Allow 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,
- Revise the special salary levels for workers in U.S. territories and in the motion picture industry.
Comments on the rule in response to the Department’s 2017 Request for Information and the Notice of Proposed Rulemaking were virtually unanimous that the thresholds required an update due to wage and salary growth since 2004.
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 Department has consistently enforced the 2004 level throughout the last 15 years.
NAHC President William A. Dombi believes it is possible the rule will have some relevance for home care and hospice, but is “not likely to have a big impact.”
More information about the final rule is available here.