The Catch-Up Payment Provision for Overtime Exempt Employees

The U.S. Department of Labor’s (DOL) final rule on defining and delimiting the exemptions for executive, administrative, professional, outside sales and computer employees (EAP employees) became effective Jan. 1, 2020. Among other things, the final rule updated the standard salary level employees must satisfy to qualify for an overtime exemption.

The final rule also allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level if these payments are made at least on an annual basis.

To enable compliance with the nondiscretionary bonus option, the final rule allows employers to make a “catch-up” payment at the end of each 52-week period. This Compliance Overview explains how this provision can be used.

LINKS AND RESOURCES

• DOL Overtime Pay website
• DOL Wage and Hour Division General Guidance on overtime pay
• Fact Sheet 17U: Nondiscretionary Bonuses and Incentive Payments (Including Commissions) and Part 541 Exempt Employees
• DOL Wage and Hour Division E-tools for overtime pay

Sectioned Information

• The final rule increases the standard salary level for the EAP exemptions to $684 per week ($35,568 per year).
• The final rule increases the salary level for highly compensated employees to $107,432 per year.
• The final rule allows employers to use nondiscretionary bonuses to satisfy up to 10% of an employee’s salary level.

Important Dates

Sept. 24, 2019

DOL announced the final rule for defining and delimiting the exemptions for executive, administrative, professional, outside sales and computer employees.

Jan. 1, 2020

Effective date for the final rule on defining and delimiting the exemptions for executive, administrative, professional, outside sales and computer employees.