Beginning January 1, 2020, updated salary thresholds for overtime will become law, resulting in over 1 million Americans becoming eligible for overtime pay through the Fair Labor Standards Act (FLSA).
The last update to the overtime salary thresholds was in 2004. Since then, wages and salaries have grown consistently, prompting the need to relook at the thresholds. Today’s rule is a thoughtful product informed by public comment, listening sessions, and long-standing calculations, says Cheryl Stanton, Wage and Hour Division Administrator.
Ruling on the Updated Salary Thresholds
In a press release from the U.S. Department of Labor, the Department announced that the final rule:
- raises the “standard salary level” from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
- raises the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year;
- allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
- revises the special salary levels for workers in U.S. territories and in the motion picture industry.
These changes and increases in overtime salary thresholds mean that approximately 1.2 million American workers, including those in the nonprofit sector, will become eligible for overtime pay at the beginning of 2020. “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,” says Patrick Pizzella, U.S. Secretary of Labor. “This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”
To read more about the final rule, visit https://www.dol.gov/whd/overtime2019/.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.