On Sept. 24, the Department of Labor announced it will publish a final overtime rule, setting the minimum salary threshold for overtime eligibility at $35,568, according to www.constructiondive.com. The threshold previously was set at $23,000.
The regulations implement the Fair Labor Standards Act’s overtime mandate, and a senior DOL official says an estimated 1.3 million additional U.S. workers will be eligible for overtime pay. The final rule will take effect Jan. 1, 2020.
The threshold is slightly higher than the $35,308 proposed in the initial draft of the rule and will allow employers to count non-discretionary bonuses, incentives and commissions as up to 10% of an employee’s salary level provided those bonuses are paid annually. The FLSA’s exemption threshold for highly compensated employees will be set at $107,432, which is lower than in DOL’s initial draft but still higher than the previous threshold of $100,000.
Some stakeholders were concerned with DOL’s methodology for calculating the new threshold, which ties the salary level to the 20th percentile of earnings of full-time salaried workers in the retail sector within the lowest-wage census region—the U.S. South. The region includes parts of Virginia, Maryland and Washington, D.C., which are three of the highest wage-earning areas in the U.S.; Tammy McCutchen, shareholder at Littler Mendelson, says if that data was removed, the threshold would be closer to $32,000.
Employee advocates think the new threshold is too low, citing the $47,000 threshold proposed by the Obama administration in 2015. The Economic Policy Institute estimates more than 8 million workers who would have been eligible for overtime under that rule would not be eligible under the new rule.
