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U.S. DEPARTMENT OF LABOR ISSUES FINAL OVERTIME RULE

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On September 24, 2019 the U.S. Department of Labor announced a final rule updating the earnings threshold necessary to exempt executive, administrative, or professional employees from the FLSA’s minimum wage and overtime pay requirements and allows employers to count a portion of certain bonuses (and commissions) towards meeting the salary level.

The final rule, provides:

  • the “standard salary level” is raised from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • the total annual compensation level for “highly compensated employees (HCE)” is raised from the currently enforced level of $100,000 to $107,432 per year;
  • employers are allowed to use non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
  • the special salary levels for workers in U.S. territories and in the motion picture industry are also revised.

The final rule will be effective on January 1, 2020.

More information about the final rule is available at https://www.dol.gov/whd/overtime2019/.

NOTE: This overtime rule change does NOT alter the exempt salary threshold for California employees under the state’s minimum salary requirement. Most California employers will continue to be governed by the State of California salary threshold.

The California minimum salary threshold for exempt employees is:

Effective Date
Employers With 25 or Less  Employees
CA Minimum Salary Basis for Exempt Employees 25 or Less
Employers With 26 + Employees
CA Minimum Salary Basis for Exempt Employees ….26 or More
1/1/2019 $11/hr

$3,813.33/month

$45,760/annually

$12/hr

$4,160/month

$49,920/annual

1/1/2020 $12/hr

$4,160/month

$49,920/annually

$13/hr

$4,506.67/month

$54,080/annual