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Breaking: US DOL Final OT Rule Raises the FLSA Exemption Thresholds, Effective Jan. 1, 2020

On Tuesday, Sept. 24, the U.S. Department of Labor (DOL) released the long-anticipated final rule for overtime exemptions, which alters the salary thresholds for several of the Fair Labor Standards Act (FLSA) exemptions. Under the final rule, the salary threshold levels for the white-collar exemptions and the highly compensated employee exemption were increased, making it more difficult for an employee to be classified as exempt under the FLSA. As a result, an estimated additional 1.3 million workers will qualify for overtime premiums.

The most important changes in the new rule include:

  • Raising the salary requirement for white-collar exemptions (executive, administrative, and professional exemptions) from $455 per week (equivalent to $23,600 per year) to $684 per week (equivalent to $35,568 per year);

  • Raising the total annual compensation requirement for highly compensated employees from $100,000 per year to $107,432 per year;

  • Permitting employers to use nondiscretionary bonuses and incentive payments (including commissions) paid on at least an annual basis to satisfy up to 10 percent of the salary requirement; and

  • Altering the special salary levels for workers in Puerto Rico, U.S. Virgin Islands, Guam, the Northern Mariana Island, and American Samoa.

The final rule will go into effect on Jan. 1, 2020. It replaces the 2016 Obama-era rule that was enjoined by a federal judge in Texas before it took effect. While the final rule raises the salary thresholds, the thresholds are significantly lower than the 2016 rule. The DOL also abandoned its plans to automatically update the minimum salary requirements over time.

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About this Author

Hayey Geiler, Dinsmore Law Firm, Cincinnati, Labor and Employment Attorney
Associate

Hayley is a member of the Labor and Employment Department where she works with clients of all sizes across multiple industries. Her practice focuses on the Fair Labor Standards Act, Family Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination Act, Title VII of the Civil Rights Acts, the Ohio Civil Rights Act and non-compete agreements.

Prior to joining Dinsmore, she served as a judicial extern for Magistrate Judge Roderick C. Young in the U.S. District Court for the Eastern District of Virginia where she gained valuable...

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Brian Moore, labor and employment litigator, Dinsmore Shohl law firm,
Of Counsel

Brian represents companies in labor, employment, and general litigation matters. His business-oriented approach enables him to guide clients through a myriad of challenges. Brian draws on his experience to help clients reach efficient resolutions -- or pursue litigation and trial -- as the situation warrants. Working with clients in the banking, insurance, retail, health care, energy, hospitality, and food and beverage industries, he has guided them through an array of issues, including discrimination, harassment, wage and hour, deliberate intent, unfair labor practice, union representation, injunction, and general litigation matters. He has substantial experience practicing in both state and federal courts, including trying cases to verdict, as well as practice before the West Virginia Human Rights Commission, the Equal Employment Opportunity Commission, and the National Labor Relations Board. He has also drafted and litigated employment and arbitration agreements, covenants not to compete, and various other contracts.

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