The U.S. Department of Labor has issued a final rule regarding qualification for overtime exemptions. The final rule increases the salary level for employees to qualify for the executive, administrative, and professional exemptions (EAP) from the Fair Labor Standards Act. Under the new rule, employers must pay overtime to EAP employees who earn less than $47,476 annually, representing a dramatic increase from the previous threshold of $23,600 annually. Beginning on January 1, 2020, the salary threshold will update automatically every three years to the 40th percentile of full-time salaried workers in the lowest-wage U.S. Census region. The final rule also increases the total annual compensation level above which Highly Compensated Employees are ineligible for overtime to $134,004 annually, also a dramatic increase from the current threshold of $100,000 annually. Despite the increases to the annual threshold amounts, the final rule made no changes to the "duties" test for employees to qualify for the EAP exemptions.
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