On September 24, 2019, the DOL announced new rules regarding the salary requirement for exempt employees under the FLSA. The DOL stated that the new rules would make 1.3 million American workers eligible for overtime compensation. The new rules, which are set to go into effect on January 1, 2020, will raise the salary requirement for the “white collar exemptions” from the current $455 per week to $684 per week—the equivalent of $35,568 a year. Additionally, the highly compensated exemption (which allows employees to be exempt if they meet at least one element of the white collar exemptions) will be raised from $100,000 per year to $107,432 per year. Moreover, recognizing “evolving pay practices,” the DOL will allow employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10 percent of the standard salary level; such payments must be made on an annual or more frequent basis.
In 2016, the DOL issued final rules regarding the salary requirements for exempt employees as well. The 2016 rules increased the salary level to $913 a week ($47,476 annually), and the highly compensated exemption was set at $134,000 a year. The 2016 increases in the compensation level would have affected over 4 million workers. However, Judge Amos L. Mazzant from the United States District Court for the Eastern District of Texas held the 2016 rules to be invalid. The court stated that the 2016 rules would essentially “supplant an analysis of an employee’s job duties.”
The new salary requirements announced today by the DOL are obviously not as steep as the requirements announced in 2016. Therefore, it is unlikely that the new salary levels will “supplant” the duties analysis of the FLSA exemptions—which remain unchanged. Accordingly, employers should evaluate their workforce and review their overtime policies in light of the new rules.