News

Labor Dept finalizes OT rule: 1.2 million more workers eligible

September 24, 2019

The U.S. Department of Labor has made official an overtime rule that sets $35,568 as the minimum salary threshold for overtime pay, making about 1.2 million more U.S. workers eligible for the extra wages, according to the DOL's news release about the change. The rule, which is effective Jan. 1, implements the mandate for overtime pay in the Fair Labor Standards Act.

Until the law becomes effective, however, only those currently permitted to claim overtime — individuals making $23,000 annually — may do so, although many in and outside the restaurant industry work several hours of overtime and fail to meet that threshold. That means they must forego the federally required additional hourly compensation of 50% more for overtime. 

Five years ago, the former administration under President Barack Obama worked to boost overtime pay to include all workers making up to $47,000 annually, which included cost of living increases. But that measure was turned back, which was considered a big win for the restaurant industry and other businesses that employ many hourly workers receiving at or around the minimum wage. 

The new rule, however, knocks nearly $12,000 off that minimum threshold and also allows employers to count non-discretionary bonuses, incentives and commissions as up to 10% of an employee's salary level as long as those bonuses are paid annually. 

"Today's rule is a thoughtful product informed by public comment, listening sessions, and long-standing calculations," Wage and Hour Division Administrator Cheryl Stanton said in the release. "The Wage and Hour Division now turns to help employers comply and ensure that workers will be receiving their overtime pay."

The final rule updates the earnings thresholds to exempt executive, administrative or professional employees from the FLSA's minimum wage and overtime pay requirements. The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004.

Nearly every person who commented on the Department's 2017 Request for Information and Notice of Proposed Rulemaking as well as those who participated during listening sessions in 2018, said the thresholds needed to be updated since no changes has been made since 2004, according to the release.