The U.S. Department of Labor today released its final overtime rule—a rewrite of the 2016 rule issued under the Obama administration that never took effect due to a federal judge’s ruling later that year. The final rule adopted many of the recommendations that ABA made in prior comment letters and that bankers advocated for during listening sessions held by DOL last fall. It will take effect Jan. 1, 2020.
As recommended by the American Bankers Association, DOL set the salary level at which an employee could be exempted from federal overtime and minimum wage requirements at $684 per week, or $35,568 per year. These figures reflect the methodology adopted by the George W. Bush administration in 2004—which set the salary level at the 20th percentile of earnings of full-time salaried workers in the lowest-wage census and in the retail sector.
DOL’s salary level reflects a significant reduction from the salary level adopted by the Obama administration, under which far more employees would have been treated as hourly earners had the 2016 rule gone into effect. DOL reaffirmed its intent to update the salary level more regularly in the future through notice-and-comment rulemaking, which ABA encouraged in previous comments.
DOL also updated the compensation threshold for an employee to be classified as a “highly compensated employee” to the 80th percentile of full-time salaried workers nationally. DOL did not propose any changes to the “duties test,” another ABA recommendation.
