2020 Final Rule on Overtime Eligibility for White Collar Employees

Time to act 2020 final rule on overtime eligibility for white collar employees.
Elga Lejarza-Penn

The effective date of this final rule is January 1, 2020

The final rule updates the earnings thresholds necessary to exempt executive, administrative and professional employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses/commissions towards meeting the salary level. The new thresholds account for growth in employee earnings since the thresholds were last updated in 2004.

If you would like to learn more about the laws surrounding the Fair Labor Standards Act (FLSA) as well as laws that that do or could impact you as an HR Professional while earning continuing education credits towards your SHRM or HRCI certification please join me at one of my upcoming Certificate Program Trainings on topics such as Employment Laws, FMLA, ADA, Pregnancy Descrimination, Interviewing Skills, OSHA and Sexual Harassment Prevention.

If you would like to learn more about our SHRM-CP®, SHRM-SCP®, aPHR™, PHR®, SPHR® Exam Prep Courses and Boot Camps please check out our upcoming Exam Prep Trainings and check out our Student Testimonials and Success Stories.

In the final rule, the Department is:

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

The Department estimates that 1.3 million workers who would otherwise be exempt under the currently-enforced standard salary level of $455 per week will either become eligible for overtime or have their salary increased to at least $684 per week, and that 4.1 million employees paid between $455 and $684 per week who fail the standard duties test (i.e., that are and will remain nonexempt) will have their overtime eligibility made clearer because their salary will fall below the specified threshold. Additionally, an estimated 101,800 workers will be affected by the increase in the Highly Compensated Employees (HCE) compensation test from $100,000 per year to $107,432 per year.

Elga Lejarza-Penn, aPHR, PHR, SPHR, SHRM-CP, SHRM-SCP

If you would like to learn more about the laws surrounding the Fair Labor Standards Act (FLSA) as well as laws that that do or could impact you as an HR Professional while earning continuing education credits towards your SHRM or HRCI certification please join me at one of my upcoming Certificate Program Trainings on topics such as Employment Laws, FMLA, ADA, Pregnancy Descrimination, Interviewing Skills, OSHA and Sexual Harassment Prevention.

If you would like to learn more about our SHRM-CP®, SHRM-SCP®, aPHR™, PHR®, SPHR® Exam Prep Courses and Boot Camps please check out our upcoming Exam Prep Trainings and check out our Student Testimonials and Success Stories.

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