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Final Overtime Rule Announced

On September 24, 2019, the U.S. Department of Labor announced the Final Overtime Rule which will go into effect January 1, 2020.  The Overtime Rule changes the eligibility requirements for executive, professional and administrative exemptions from overtime pay under the Fair Labor Standards Act (“FLSA”).  Under the Final Rule:

  • minimum salary increases from $455 per week to $684 per week, the equivalent of $35,568 per year
  • nondiscretionary bonuses and incentive payments, such as commissions, may be used to satisfy up to 10 percent of the salary level 
  • minimum total annual compensation for highly compensated individuals from $100,000 to $107,432
  • does not change the duties basis for exemptions

Employers should immediately review their payment practices to ensure that any employee who is currently classified as exempt will qualify to remain so under the final rule.  Those who do not make at least $684 per week must be re-classified as non-exempt and must be paid overtime pay for hours worked over 40.  Although not modified by the Final Rule, employers should take this opportunity to assess the job duties of exempt employees.  To determine if this criteria is satisfied, employers must consider the actual duties performed rather than focus on a job title, job description, or what the employer thinks an employee should be doing.  You may wish to seek legal counsel to determine whether an employee is exempt.  Misclassification of employees continues to be a frequent subject of state and federal enforcement actions, and the number of FLSA cases brought by employees is also on the rise. 

Should you need help regarding who may be exempt, your obligations under the new final rule or have questions about other employment matters, contact T. Christine Pham of Rosenberg Martin Greenberg, 410-727-6600 or by email cpham@rosenbergmartin.com.  Over the past 20 years, Christine has defended individual and class employment actions at the agency level and in court.  Providing legal advice with a business mindset, she has counseled hundreds of employers, to effectively reduce, and attempt to eliminate, the risks of employment claims and litigation.