On September 24, 2019, the U.S. Department of Labor (DOL) issued its final rule to update the salary thresholds necessary to qualify as exempt employees: www.dol.gov/whd/overtime2019. The new ruling will take effect on January 1, 2020.
Under the Fair Labor Standards Act, certain employees may qualify as exempt from the minimum wage and overtime requirements if they fit within the definitions of exempt executive, administrative and professional employees and meet certain salary thresholds. These thresholds were last updated in 2004. The final rule sets the new thresholds and provides that employers may count portions of bonuses and commissions towards meeting the thresholds.
Under the final rule, the “standard salary level” has been increased from $455 per week to $684 per week, which would be equivalent to $35,568 annually. The final rule also increases the annual compensation for a “highly compensated employee” from $100,000 to $107,432. It also allows employers to use annual, nondiscretionary bonuses and incentive payments to satisfy up to 10% of “standard salary level.”
The DOL estimates that 1.3 million workers will now be eligible for overtime.
If you are an employer, it is strongly recommended that you conduct an audit of your employees to determine if any fall under the new guidelines and therefore whether you will need to track their hours for overtime pay purposes. Tracking hours of a former exempt employee may be difficult as in most instances this was not done in the past and will require developing and implementing a system for doing so. Employers need to be aware that the burden of maintaining an employee’s time record is on the employer, such that tracking hours in the past can be a daunting task. For some employers it may be easier to raise the employee’s pay so they fall within the new guidelines for exempt. In addition,or certain employers, the DOL has also revised pay levels for workers in US territories that are consistent with the minimum wage levels in those territories and raised the “base rate” for those employed in the motion picture industry.
PK Law’s Labor and Employment Attorneys can assist with helping employers navigate through the new requirements to ensure full compliance.
Paul Finamore is a Member in PK Law’s Labor and Employment Group. He is an experienced trial lawyer who has practiced in state and federal courts throughout Maryland and the District of Columbia for over 30 years. His experience includes litigation of general and professional liability matters, including first and third party insurance claims; insurance fraud; liability claims involving accountants, insurance agents, dentists, title companies and underground facility locating services; and the defense of employment litigation claims such as Title VII; age, race, and gender discrimination; wage and hour; whistle blowing; wrongful termination; ADA, FMLA and FLSA. Paul can be reached at firstname.lastname@example.org and (410)740-3170.