Changes in Overtime Rules implemented by the Department of Labor

Changes in Overtime Rules implemented by the Department of Labor

The U.S. Department of Labor announced a final rule to make 1.3 million U.S. workers eligible for overtime payments under the Fair Labor Standards Act (FLSA).

The final rule updates the income thresholds needed to exempt executive, administrative, or professional employees from FLSA's minimum wage and overtime pay requirements, and it allows employers to include a portion of certain bonuses (and commissions) to reach the required wage level. The new thresholds take into account the growth in employee income since the current thresholds were established in 2004. In the final rule, the Department of Labor does the following:

  • Raise the "standard wage level" from the current level of $455 per week to $684 per week (equivalent to $35,568/year for a worker who has worked throughout the full year);
  • Raise the total annual compensation level for "highly compensated employees (HCE)” of the current set level of $100,000 to $107,432 per year;
  • Allow employers to use non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually to be part of the standard wage level up to 10%, in recognition of the evolution in compensation practices;
  • Review special wage levels for workers in the film industry working in U.S. territories.

The final rule took effect on January 1, 2020.

The Department estimates that 1.2 million additional workers will be entitled to minimum wage and overtime payments as a result of the increase to the standard wage level. The Department also estimates that another 101,800 workers will be entitled to overtime payments as a result of the increase in the level of HCE compensation.

Increases to wage thresholds have long been delayed due to rising wages since 2004.

You can read the full note in the portal of the Department of Labor:

We recommend watching this video in which we explain in detail what has changed and how it might affect you (in Spanish):