New Fair Labor Standard Act (FLSA) minimum salary thresholds for exempted employees and changes to the overtime exemptions
On September 24, 2019, the U.S. Department of Labor (“DOL”) announced a final rule change to the minimum salary threshold for exempted employees which goes into effect as of January 1, 2020. The new rule increases the minimum salary threshold for executive, administrative and professional employees who are exempted from the Fair Labor Standard Act’s minimum wage and overtime pay requirements.
The new rule will affect more than a million exempt employees by raising the minimum salary threshold (also known as the “standard salary level”) established in 2004 from $455 per week (annualized salary of $23,660) to $684 a week (annualized salary of $35,568). This change in the final rule also means that employees who make less than $35,568 per year are now eligible for overtime pay under the DOL’s final rule. The new rule does not change the duties test requirement, only the minimum salary thresholds.
The new rule also changes the total annual compensation requirement for “highly compensated employees” from $100,000 per year to $107,432 per year (Note: $684 per week or the equivalent must still be paid as a minimum salary for).
Employers are also allowed to use up to ten (10%) percent of nondiscretionary bonuses and incentive payments (including commissions) provided paid at least annually, to satisfy the standard salary level threshold.
Finally, the final rule also revises special salary levels for workers in the motion picture industry and in U.S. territories.
Employers are strongly advised to conduct a review of how this new rule will affect their company and to start making arrangements for restructuring and/or reclassifying exempt employees to non-exempt employees or to increase exempted employees’ salaries to be compliant with the new DOL rule.
We hope that this article has been helpful to all employers.
The Campbell Law Group PA is well-equipped to serve all businesses throughout Florida with all manner of legal matters including advising your company as to any issues related to employment law and the recent DOL’s rule changes.
If we can be of any assistance to your company, please do not hesitate to contact us or set up a free consultation to discuss your concerns or legal issues affecting your business.