Effective January 1, 2020 – New FLSA Rules for all Employers!

The U.S. Department of Labor (DOL) has issued a new update to the FSLA (Fair Labor Standards Act) updating the minimum salary requirements for the “white collar” (executive, administrative, and professional) overtime exemptions. The new rule goes into effect on January 1, 2020.

 The Department of Labor (DOL) has required the annual salary level for the executive, administrative, and professional exemptions will increase to $35,568, or $684 per week. The new Fair Labor Standard Act (FLSA) minimum salary represents a 50% increase from the current level of $23,660 ($455 per week). Employers with exempt workers who currently earn more than $455, but less than $684, per week, and who satisfy the duties requirements, may comply with the new rule by either increasing employee salaries to the new level; limiting hours to preclude overtime work; and/or by reclassifying employees as non-exempt. Industries most likely affected by the change include retail, hospitality, and the non-profit sector. As always, employers must comply with state requirements.

 The new FSLA permits a catch-up payment at year-end, up to 10% of the standard salary level (i.e., $3,556.80), if the employee has not earned sufficient nondiscretionary pay to satisfy the required salary. In contrast, Highly compensated employees must meet without including any nondiscretionary pay, although such payments can be included in meeting the annual compensation requirement of $107,432. 

 The final FLSA rule does not:

• change the regulatory text for primary duty;
• revise the tests for the duties required of executive, administrative, or professional employees;
• amend the salary basis test;
• apply any new compensation standards to doctors, lawyers, teachers, or outside sales employees; or
• make any changes to the computer employee exemption (other than the salary increase, as may be applicable).

Reference: (Passantino, A.J., 9/24/2019) Part 541 Salary Level Increases to $684/Week, Seyfarth Law Firm

DOL.gov