Fair Labor Standards Act (“FLSA”) Overtime Pay Rule Finalized

In September, the DOL announced its final rule regarding overtime pay, effective January 1, 2020. The final rule increases the threshold from $455/week to $684/week ($35,568 annually) for salaried employees and from $100,000 to $107,432 (annually) for “highly compensated employees.” In addition, employers may satisfy up to 10% of this salary requirement with nondiscretionary bonuses and incentive payments (e.g., commissions).

As we have cautioned previously, the salary threshold is just one component of the exemption test. To be exempt from overtime pay under the FLSA, an employee must also meet the duties test of the corresponding exemption (e.g., administrative, executive, professional). The final rule does not directly affect this requirement or change any of the elements of the various duties tests. However, this remains the most overlooked consideration in determining exemption eligibility.

Business Takeaway: You still have six weeks to get your “ducks in a row” on this one. In auditing your workforce, consider compensation, of course, and actual job duties (not just job titles or an outdated list of duties). As to compensation, start by focusing on exempt employees who are making less than $35,568 per year. The 2004 changes led to a spike in FLSA litigation, and the proposed 2015 changes prompted quite a scramble amongst business owners before they were halted. Contact Adam at 414-446-8800 or adam@goldsteinsc.comregarding these changes and any related employee classification questions.