Member Article

Effective January 2020, U.S. Department of Labor (DOL) increased the salary thresholds for several of the Fair Labor Standards Act (FLSA) exemptions. The salary threshold levels for the white-collar exemptions and the highly compensated employee exemption have increased, making it more difficult for an employee to be classified as exempt under the FLSA. As a result, an estimated additional 1.3 million workers now qualify for overtime premiums. The key salary threshold changes include:

• Raising the salary requirement for white-collar exemptions (executive, administrative, and professional exemptions) from $455 per week (equivalent to $23,600 per year) to $684 per week (equivalent to $35,568 per year);

• Raising the total annual compensation requirement for highly compensated employees from $100,000 per year to $107,432 per year; and

• Altering the special salary levels for workers in Puerto Rico, U.S. Virgin Islands, Guam, the Northern Mariana Island, and American Samoa.

As part of the update, employers are now permitted to use nondiscretionary bonuses and incentive payments in compensation calculations (up to 10 percent of the employee’s total income) provided these payments are made at least annually. Additionally, employers are permitted to make a final catch-up payment within one pay period after the end of each 52-week period to bring an employee’s compensation up to the required level.

If you currently have workers classified as exempt, be sure to review their compensation to make sure they meet the minimum pay to remain not subject to overtime. For more information regarding compliance with the new regulations, please contact your Dinsmore labor attorney.