Under President Obama, the Department of Labor issued new overtime rules in 2016 that changed the minimum salary required for employees to be exempt under the Fair Labor Standards Act (FLSA). But before those rules could take effect, a federal court enjoined the new rule, preventing it from taking effect. While the appeal on that case was pending, the Department of Labor proposed a new rule with a minimum salary requirement from $35,308 ($679 per week) instead of the $47,476 minimum salary ($931 per week) issued under the Obama administration. The new rule has not yet been approved but will likely be approved soon and will probably take effect in 2020. Among other things, the new rule:
- Increases the minimum salary required for an employee to qualify as FLSA exempt from the currently-enforced level of $455 to $679 per week (equivalent to $35,308 per year).
- Increases the total annual compensation requirement for “highly compensated employees” (HCE) from the currently-enforced level of $100,000 to $147,414 per year.
- Does not include automatic adjustments to the salary threshold, but the DOL has given its commitment to periodically review the salary threshold. Any update would continue to require notice-and-comment rulemaking.
- Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level.
