U.S. Department of Labor Updates Overtime Regulations
Final rule allows employers to count a portion of certain bonuses and commissions toward meeting the salary level.
The U.S. Department of Labor announced a final rule updating overtime regulations. The rule updates the earnings thresholds necessary to exempt executive, administrative, and professional employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements.
In addition, the final rule allows employers to count a portion of certain bonuses and commissions toward meeting the salary level. The new thresholds account for growth in employee earnings since the thresholds were last updated in 2004. The final rule is effective on Jan. 1.
In the final rule, the Department of Labor will:
- Raise the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker).
- Raise the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year.
- Allow employers to use non-discretionary bonuses and incentive payments (including commissions) to be paid at least annually to satisfy up to 10% of the standard salary level in recognition of evolving pay practices.
- Revise the special salary levels for workers in U.S. territories and the motion picture industry.
Question of the Week
Q. Can a federal credit union (FCU) provide a loan to a nonmember as a co-borrower, provided a member is liable for the full amount of the loan?
A. FCUs can only provide loans to members. Nonmembers can participate in loans if the lending relationship is directly between the FCU and the member. When determining whether the nonmember is distorting the lending relationship, the FCU should consider: the ability of the member to repay, whether the nonmember provided collateral, if the nonmember has the primary liability for repayment and, if the nonmember is benefiting from the loan. The nonmember cannot directly receive the use or benefit of the loan proceeds.
Nonmembers may be guarantors for a loan to a member, making them liable if the member does not repay the loan. In this case, the nonmember would be qualified as a guarantor, rather than a loan recipient. Nonmembers can participate in assisting the member in securing the loan. An incidental benefit to the nonmember is permissible.
If the nonmember is a spouse and the loan is for marital debt, it can be presumed that he or she will benefit from the loan proceeds. However, the exception is that the member can also be said to receive the entire benefit because, due to the marital relationship, the member will be jointly and severally liable. Therefore, the spouse is simply providing additional assurance that the loan will be repaid. On the other hand, if the debt is solely that of the nonmember acquired before the marriage, the marital relationship would not serve as a protection because the member would not be jointly and severally liable.
National Credit Union Administration (NCUA)
The NCUA and SBA are cohosting a webinar on “The Big Picture of SBA Lending for Credit Unions” on Oct. 16 at 11 a.m. PDT, 12 p.m. MDT.
Consumer Financial Protection Bureau (CFPB)
The CFPB published four FAQs on the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act and the impact of the amendments to the SAFE Act made by section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.
It also released the Filing Instructions Guide (FIG) for HMDA data to be collected in 2020 and reported in 2021.
The CFPB also released the Quarterly Consumer Credit Trends report.
U.S. Department of Labor (DOL)
The U.S. DOL issued a final overtime rule which will be effective Jan. 1. The rule raises the overtime threshold for AEP workers to $35,568 a year.
Federal Reserve (FRB)
The FRB, FDIC, and OCC issued a final rule that increases the threshold for residential real estate transactions requiring an appraisal from $250,000 to $400,000.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of Sept. 26. The last update prior to this was Sept. 20.
Questions? Contact the Compliance Hotline: 1.800.546.4465, [email protected].