Compliance Alert: DOL Issues New Salary Limits for Overtime Exemptions

Compliance Alert - Overtime Exemptions
Compliance Alert - Overtime Exemptions

OVERVIEW

On Sept. 24, 2019, the U.S. Department of Labor (DOL) announced a new final rule that updates the salary thresholds that some individuals must meet in order to qualify for a minimum wage and overtime exemption under the federal Fair Labor Standards Act (FLSA). The final rule becomes effective on Jan. 1, 2020.

The final rule affects the exemptions for executive, administrative and professional (EAP) employees, highly compensated employees (HCEs), employees in the motion picture industry and individuals who work in various U.S. territories.

 

ACTION STEPS

The final rule’s Jan. 1, 2020 effective date leaves little time for employers to prepare for the changes. Employers should:

  • Determine which currently exempt employees have salaries below the new threshold
  • Decide whether to increase salaries for these individuals or reclassify them as non-exempt employees

 

HIGHLIGHTS

  • The final rule increases the standard salary level for the EAP exemptions to $684 per week ($35,568 per year)
  • The final rule increases the HCE salary level to $107,432 per year
  • The final rule permits using 10 percent of nondiscretionary bonuses to calculate an employee’s salary level

 

IMPORTANT DATE

  • September 24, 2019 | Final 2019 overtime rule is announced
  • January 1, 2020 | Final 2019 overtime rule becomes effective

 

 

Source: © 2019 Zywave, Inc.

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