ISSA Alert October 1, 2019
On September 24, the U.S. Department of Labor (DOL) announced it finalized new rules relating to overtime pay for salaried workers this week. ISSA’s formal comments were referenced twice by the DOL in the final rule, which you can review here.
The new final rule, effective January 1, 2020, increased the salary level that defines employee eligibility for overtime pay from US$23,700 to $35,568. Employees earning less than this amount are automatically considered eligible for overtime pay. Conversely, employees that earn more than this amount, and who perform duties that are “executive, administrative or professional” in nature are not eligible for overtime pay. The original 2016 rule, if it had gone into effect would have increased the threshold to $51,000 in January of 2020.
A few other items of note regarding the rule:
- No changes were made to the duties test.
- The DOL decided to set one national threshold rather than changing it by region.
- The threshold will not automatically increase, but rather will be reviewed every four years. Any increase must go through the regular rulemaking process.
- The total annual compensation requirement for highly compensated employees (HCE) increased from $100,000 to $107,432. This is lower than the proposed $147,414 amount.
- Non-discretionary bonuses & incentive payments (including commissions) paid at least annually can count for up to 10% of the salary threshold.
- The rule did not address the discrepancy that inside sales personnel are nonexempt while outside sales personnel are statutorily exempt.
“The final overtime rules are much more reasonable than the original rule proposed in 2016,” said John Nothdurft, ISSA Director of Government Affairs. “ISSA has been active in advocating for more sensible and workable overtime rules by submitting comments and attending public hearings, as well as engaging its 9,300 members throughout the cleaning industry. We are happy to see the DOL listened to many of our members’ concerns.”
ISSA’s 2015 comments to DOL pointed out the original iteration of these regulations would have cost our members, “$100,000 to well over $750,000 annually depending on the size of the company and the number of employees.”
Since 2015, ISSA has been active on this issue by being a member of the Partnership to Protect Workplace Opportunity (PPWO), submitting comments, participating in a U.S. Small Business Administration’s Office of Advocacy roundtable discussion, as well as engaging members with regular updates on the subject.