On September 24, the U.S. Department of Labor (DOL) released the final rules increasing the minimum salary level for the Fair Labor Standards Act (FLSA) “white collar” exemptions from $455 to $684 per week. The proposed rules, which were published in March, would have set the salary level at $679 per week.
Effective January 1, 2020, the final rule:
- Raises the salary threshold to $684 a week or $35,568 a year (up from $455 a week or $23,660 a year). This translates to a salary threshold of $1,368 for employees paid on a biweekly basis, $1,482 for employees paid on a semimonthly basis, and $2,964 for employees paid monthly.
- Raises the total annual compensation requirement for highly compensated employees (HCEs) to $107,432 (up from $100,000 per year).
- Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level.
- Revises the special salary levels for workers in U.S. territories. The rule sets the salary threshold at $455 per week in Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands. In American Samoa, the salary threshold is set at $380 per week.
The rule has been submitted for publication in the Federal Register, but has not yet been scheduled for publication. A prepublication version is available on the DOL website. In addition, the DOL published a Fact Sheet and Frequently Asked Questions concerning the final rule.
Additional information about the new rule is available in a Compliance Update, which was emailed to APA members on September 24, and on the Compliance Hot Topics webpage covering the White Collar Exemptions. In-depth coverage of the rule will be featured in the October issue of Payroll Currently.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.