DOL Issues New Salary Limits for Overtime Exemptions

December 23, 2019

On September 24, 2019 the U.S. Department of Labor (DOL) announced a new updated salary threshold that some individuals must meet in order to qualify for a minimum wage and overtime exemption under the federal Fair Labor Standards Act (FLSA.) The final rule becomes effective on Jan. 1, 2020.

It’s important to note that this rule does not for NYS employers since the salary threshold is higher in any case.

Who Is Affected?

The final rule affects the exemptions for executive, administrative, and professional (EAP) employees, highly compensated employees (HCEs), employees in the motion picture industry and individuals who work in various U.S. territories.

What’s the 2020 Overtime Final Rule?

The final rule’s salary levels differ from both the 2016 and 2019 proposed levels. For 2020, the final rule EAP and HCE salary exemptions are as follows:

  • Standard salary level: $35,568 per year ($684 per week)
  • HCEs: $107,432 per year

The DOL intends to update the standard salary and HCE total annual compensation levels more regularly in the future through notice-and-comment rulemaking.

As an employer, what should I do next?

To prepare for the final rule, effective on Jan. 1, 2020, employers should:

  • Determine which currently exempt employees have salaries below the new threshold.
  • Decide whether to increase salaries for these individuals or reclassify them as nonexempt employees.

At Brand’s, we make it easy for you to stay updated and compliant with the latest laws. To learn more about our services or how we can help your business, contact us here.