The U.S. Department of Labor (DOL) announced a proposed rule that would increase the minimum salary level for the Fair Labor Standards Act (FLSA) “white collar” exemption from $455 to $679 per week (or $23,660 per year to $35,308 per year) beginning on January 1, 2020 [DOL News Release, 19-412-NAT, 3-7-19].
The white collar regulations implement exemptions from the FLSA’s minimum wage and overtime pay requirements for executive, administrative, professional, and certain other employees. The overtime threshold was last updated in 2004. A 2016 final rule that would have changed the overtime threshold was invalidated by a court order.
The proposed rule would also:
- Increase the salary requirement for Highly Compensated Employees (HCEs) from $100,000 to $147,414 per year.
- Allow employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10% of the standard salary level.
The proposed rule would not make changes to the job duties test, nor would it include a provision to automatically adjust the salary threshold. However, the DOL does recognize the need to adjust the salary level on a more frequent basis (and suggests doing so every four years through the notice and comment process).
The proposed rule has been submitted to the Office of the Federal Register for publication in the Federal Register. Once it is published, the public will be given a chance to comment on the proposed rule. More information, including a link to the prepublication version of the proposed rule, is available on the DOL webpage Notice of Proposed Rulemaking: Overtime Update.
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