Labor Department Issues Final Rule on Overtime Pay
After four years of uncertainty, the DOL has set a new wage threshold up to which employers must pay workers for overtime. The final rule falls about halfway between the current level and the one initially proposed by the Obama administration.
Resolving a workplace issue that for years has concerned employers and employees alike, the Department of Labor this week issued a final rule that will make overtime pay available to 1.3 million additional workers.
The new rule, which will take effect January 1, 2020, will raise the annual salary level up to which companies will have to pay overtime to nonexempt workers from $23,660 to $35,568. Workers earning less than that amount annually will be paid time and a half when they work more than 40 hours per week. The overtime rule was last adjusted in 2004.
“For the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans,” Acting Secretary of Labor Patrick Pizzella said in a statement. “This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”
The overtime rule was identified as a major concern by many nonprofit employers in 2015, when the Obama administration proposed raising the salary threshold for overtime eligibility to more than $47,000. That rule was challenged in court in 2016 by states and various business groups, including ASAE, and was struck down.
ASAE stated at the time that it supported raising the minimum salary level for overtime eligibility to reflect inflation and increases in the costs of living since the previous update in 2004. But it argued that the Obama-era proposed rule disregarded regional differences in the level of income needed to achieve a middle-class standard of living and would have adversely affected many smaller associations and nonprofit groups.
The new rule does not include a provision to index the salary level to wage growth as the Obama-era rule proposed.
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