Compliance Memos: November 2019

DMEC Staff@Work

New Overtime Rule Affects 1.3M Employees on Jan. 1

Beginning Jan. 1, 2020, a salaried employee must earn at least $35,568 per year to be exempted from mandatory overtime for working more than 40 hours per week. The new U.S. Department of Labor rule will extend overtime to an estimated 1.3 million employees who were formerly classified as exempt. To reach the new “standard salary level” of $35,568 annual, the rule allows employers to count non-discretionary bonuses, incentives, and commissions as up to 10% of an employee’s salary, if the bonuses are paid annually. This rule replaces an Obama-era rule, opposed by many employers and blocked by judicial action, which would have extended mandatory overtime to 4 million salaried employees. Employers should review their salaried workforce before the end of 2019 to assess the impact of the new rule. To comply with the new overtime rule, employers can increase salaries above the new standard salary level; pay overtime to salaried employees earning below that level; and consider increased employee count or reassigning job functions to get the work done without overtime. To learn more, visit https://www.dol.gov/newsroom/releases/whd/whd20190924.

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