On September 24, 2019, the U.S. Department of Labor announced a final rule to make 1.3 million American workers newly eligible for overtime pay.
Effective January 1, 2020, the minimum required salary threshold necessary to maintain exempt status under the executive, administrative and professional exemptions of the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements has been increased from $455 to $684 (equivalent of $35,568 per year). The new rule allows employers to count a portion of certain bonuses and commissions towards meeting the salary level. This is the first increase since the current rule was updated in 2004.
The total annual compensation requirement for “highly compensated employees” has increased from $100,000 per year to $107,432 per year. The new rule 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.
Being compensated on a salary basis is only one factor in determining whether your employees are truly exempt under the FLSA. A detailed analysis of the employee's duties is required to ensure they meet the criteria to qualify for these exemptions.
Contact me for a comprehensive review of your salaried employees to determine if they meet the salary and duties requirements to be exempt under the FLSA.