The U.S. Department of Labor is updating and revising the earnings thresholds necessary to exempt executive, administrative or professional employees (EAP or “white collar”) from the Fair Labor Standards Act’s overtime pay requirements. The final rule will be effective January 1, 2020. Employees who work more than 40 hours in a workweek but who meet both the salary and duties tests for an EAP exemption do not have to be paid the federal overtime premium of 1.5 times their regular rate of pay. The EAP exemption salary threshold is increasing from the current $23,660 to $35,568 per year (or from $455 to $684 per week).

The DOL is allowing up to 10% of these salary thresholds to be satisfied by nondiscretionary bonuses or commissions. No changes were made to the EAP exemptions duties tests. The salary threshold for highly compensated employees (HCEs) also is being increased from the current $100,000 to $107,432 (there are no duties tests for HCEs). The new rule requires that HCEs receive at least $684 per week in salary, but the remainder of their compensation may be in the form of nondiscretionary bonuses or commissions. 

NADA is amending its Dealer Guide to Federal Wage and Hour, Child Labor and Wage Discrimination Compliance to reflect these new changes. *Important: under federal law, it is possible for more than one overtime exemption to apply to a given employee and for certain state laws to restrict how federal overtime exemptions may be applied. For more information email [email protected].