DOL New Salary Minimum
In a long-anticipated revision to the Fair Labor Standards Act, the Department of Labor has announced the new salary minimum that employers must pay their salaried exempt employees under the executive, administrative and professional exemptions. In order for someone to be exempt from the time and a half overtime requirement their position must meet a two-factor test.
The position must meet a duties test (this is not changing)
It must also be paid on a salary basis test (currently $455 per week / $23,660 annualized) - this is changing to the $684 per week / $35,568 annual minimum salary effective January 1, 2020. Employers can satisfy up to 10% of the salary requirement with non-discretionary bonuses and incentive payments, including commissions.
In addition, the total compensation requirement for the highly compensated exemption is raising from $100,000 to $107,432 per year.
What if you have employees that meet the duties test but not the salary? Beginning January 2020, affected employees must either be changed to nonexempt and paid for all hours worked or be given a pay increase to meet the minimum.
What should you do now? Begin by running reports to see what employees are impacted so that you can begin planning for January.
The last time the salary level was raised was in 2004. In an effort to make more regular updates to the salary levels, a significant piece of the proposed legislation included automatic increases to the salary threshold. This section did not make it into the final legislation, but the DOL has committed to providing more regular updates to the levels.
We are here to help you with your specific wage and hour and other HR questions, contact us at HR Link.