Flashback to June of 2016. If you were like most employers, you were left scrambling in a panic, trying to navigate the Department of Labor’s (DOL) recently proposed overtime rule changes. Since that period of uncertainty, a lot has changed. An injunction was passed in November 2016, pressing pause on the much anticipated and highly debated rule, but news broke just this week announcing a new salary threshold. Here’s a recap of the latest and what lies ahead.
New Salary Threshold Announced
On September 24, 2019, the Department of Labor issued its final overtime rule which will increase the minimum salary threshold for overtime exemption from $23,660 per year to $35,568 per year. The new rule will take effect beginning January 1, 2020.
Under the new threshold, nearly 1.3 million workers in the United States will become eligible for overtime pay. According to Wage and Hour Division Administrator Cheryl Stanton, “The rule is a thoughtful product informed by public comment, listening sessions and long-standing calculations.”
Below are other changes outlined in the new rule:
- The standard salary level will increase from $455 per week to $684 per week.
- The new rule will also raise the total annual compensation level for highly compensated employees from $100,000 to $107,432.
- Employers are permitted to satisfy up to 10% of the standard salary level with nondiscretionary bonuses and incentive payments (including commissions) that are paid annually.
While challenges to the rule are expected, employers have a decision to make. Workers that make less than $35,568 annually must either receive a raise to meet the new threshold amount or be paid overtime. The new ruling will impact millions of workers across the country, specifically those in the retail and service industries.
To prepare for January 1, 2020, employers should review their existing compensation policies and practices to ensure compliance.
How Paycor Can Help
With all compliance regulations and impending announcements, stay tuned to Paycor’s Resource Center for updates and any late-breaking announcements.
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