For nearly 3 years, an update to the overtime pay rule was held up in court battles, but we may finally have a resolution. The update sought to increase the minimum salary threshold of workers that are exempt from being paid overtime pay for any overs worked over the traditional 40 hour work week.
On September 24, 2019, the US Department of Labor announced a new final rule to increase the salary threshold of workers that must be paid salary from $23,660 per year to $35,568 per year. “White collar” workers who make an annual salary below the new threshold will now be legally required to receive overtime pay starting January 1, 2020. “Blue collar” workers are listed as “non-exempt” and will continue to be required to be paid overtime.
The new rule has been dubbed the very succinct title of “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” or DDEEAPOSCE for short. [/sarcasm] The full Federal Register Notice can be read by clicking here.
The previous threshold increase that was tied up in court was $47,476, but many, including several construction industry groups, argued that a change that big would be too devastating for many companies to swallow at once.
In addition to the increase above, the threshold for “Highly Compensated Employees (HCEs)” also increased from $100,000 to $107,432. HCEs must meet more relaxed conditions to be exempt from overtime pay.
In addition, nondiscretionary bonuses and incentive payments can be counted as part of the salary for HCE and standard salary employees for up to 10% of the standard salary level.
Just like in previous years, we can expect some additional pushback before the effective date hits at the beginning of the year, but until then, employers should gear up for the change.
To help with the transition, Associated Builders and Contractors (ABC), one of the industry groups that fought back against the 2016 proposal, is hosting a webinar about the new rule on October 29 at 2pm EST called “What Does the New DOL Final Overtime Rule Mean for Construction Industry Employers?” To register for the 60 minute webinar, click here.
For more information, visit the US Department of Labor’s Overtime Update website.
