DOL issues final OT rule: It’s more good news than bad

by Christian Schappel

Is the DOL’s new overtime rule going to be a burden for businesses? Yes. There’s no denying that. But compared to the original proposal, there are some things to be happy about. 

To be clear, we’re not saying employers should be excited for the rule. Rather, if you were expecting the final rule to be as daunting to comply with — or worse — than the proposed rule, there are some things to be happy about.

Specially, the good news is:

• The salary threshold was lowered. The proposed rule said the annual salary an employee had to be paid to be considered exempt under the FLSA would be $970 per week or $50,440 per year. That number has now been dropped to $913 per week or $47,476 per year.
• The threshold won’t increase every year. In its proposal, the DOL suggested tying the threshold to an automatic escalator, which likely would’ve resulted in the threshold climbing annually. Instead, the final rule says the threshold will increase every three years.
• Nondiscretionary bonuses count toward the threshold. Other than for highly compensated individuals, nondiscretionary bonuses haven’t counted toward an individual’s salary and, therefore, couldn’t help employers push workers over the exemption threshold. But the final rule emends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the new $47,476 salary level.

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