New Federal Overtime Rule Effective December 1

Effective December 1, a new rule updates the regulations governing which executive, administrative, professional, and highly compensated employees are entitled to the minimum wage and overtime pay protections of the federal Fair Labor Standards Act (FLSA).

Current Rules

The current federal rules provide an exemption from both the minimum wage and overtime pay requirements of the FLSA for bona fide executive, administrative, and professional employees who meet certain tests regarding their job duties and who are paid on a salary basis at not less than $455 per week ($23,660 per year). "Highly compensated employees" (HCEs) who are paid total annual compensation of $100,000 or more and meet certain other conditions are also deemed exempt.

New Rule

The new rule updates the salary and compensation levels needed for executive, administrative, professional, and highly compensated employees to be exempt. In particular, the final rule:

Raises the salary threshold from $455 a week to $913 per week (or $47,476 annually) for a full-year worker;

Increases the HCE total annual compensation level to $134,004 annually;

Amends the regulations to allow employers to use nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long as employers pay those amounts on a quarterly or more frequent basis; and

Establishes a mechanism for automatically updating the salary and compensation levels every 3 years, beginning on January 1, 2020.

Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law.


Information provided HR360, the award-winning online HR library featuring easy-to-understand guidance on federal and state labor laws and Health Care Reform along with interactive HR tools and hundreds of forms and posters.The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

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