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FLSA overtime salary threshold increases

The U.S. Department of Labor has released the final rule on the threshold to qualify for overtime under the Fair Labor Standards Act. The new rule increases the standard salary level to a weekly wage of $684 per week ($35,568 for the year), an increase from the current threshold of $455 per week ($23,700 per year).  Incentive payments—including commissions—may satisfy up to 10 of the annual standard salary level.

Under the FLSA, nonexempt employees must be paid an overtime rate of at least time and a half for all hours worked above 40 hours a week. The FLSA overtime requirement does not apply to employees whose nature of employment meet the FLSA criteria, receive a salary, and that salary meets the minimum threshold set by the DOL. The new salary threshold will take effect Wednesday, Jan. 1, 2020.

Currently, the threshold is $23,660—or $455 a week—the same rate it has been since 2004. Under President Barack Obama, the DOL attempted to double the threshold, but a federal judge struck down the change. By the time the federal judge ruled against President Obama’s proposal to increase the threshold, President Donald Trump had taken office.

The secretary of labor decided not to appeal the decision. Instead, the DOL reviewed the issue and released a more modest increase to the overtime threshold for nonexempt employees under the FLSA. The increase went through the notice and comment process, and the DOL released the final rule on Sept. 24, 2019.

For more information on the FLSA, access QS90722 in the PIA QuickSource library. Watch your PIA publications for information on coming educational courses on the FLSA and new overtime rule.