Thursday, November 21, 2019

New DOL overtime regulations: Non-discretionary bonuses and commissions

One area of the new U.S. DOL overtime regulations that has not received a lot of attention is the new rule regarding non-discretionary bonuses and commission payments. Like the proposed Obama-era rule, the new rule likewise allows employers to cover up to 10% of the minimum salary threshold for exempt employees.

The new threshold is $684/week. Employers may pay as little as 90% of that ($615.50), so long as they cover the difference with non-discretionary bonuses or commissions. What happens if the employee does not earn enough to make up the 10%?
Not official use.
The final rule permits employers to meet the salary level requirement by making a catch-up payment within one pay period of the end of the 52-week period. In plain terms, each pay period an employer must pay the [exempt] employee on a salary basis at least 90 percent of the standard salary level and, if at the end of the 52-week period the sum of the salary paid plus the nondiscretionary bonuses and incentive payments (including commissions) paid does not equal the standard salary level for the 52-week period, the employer has one pay period to make up for the shortfall (up to 10 percent of the required salary level). Any such catch-up payment will count only toward the previous 52-week period's salary amount and not toward the salary amount in the 52-week period in which it was paid.
This is different from the Obama-era rule, which required employers to catch up or pay the bonuses at least quarterly.

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