On September 24, 2019, the U.S. Department of Labor announced its final rule regarding the much anticipated raising of the standard salary level, making 1.3 million American workers newly eligible for overtime pay. Most significantly to New Jersey employers, employees previously designated as exempt from overtime may now become non-exempt and eligible for overtime pay for failing to meet the salary requirement threshold.
The updated rule allows employers to count a portion of certain bonuses/commissions towards meeting the salary level.
With the implementation of the final rule, the Department of Labor will:
- Increase the current salary level from $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
- Increase the total annual compensation requirement for highly compensated employees from $100,000 per year to $107,432 per year; and
- Permit employers to use nondiscretionary bonuses and incentive payments such as commissions paid at least annually to satisfy up to 10% of the required salary level necessary to meet the exemption.
The final rule goes into effective on January 1, 2020. Employers are urged to review their job descriptions and pay plans to ensure that all employees are properly classified by year-end.
For any questions or concerns with regards to the update to the Fair Labor Standards Act, feel free to reach out to Sharon Bleibtreu, Human Resources Director and Head of the HR Consulting Practice at Sax. She can be reached at sbleibtreu@saxllp.com or (973) 554-6170.