The U.S. Department of Labor (DOL) is proposing to increase minimum salary levels under the Fair Labor Standards Act (FLSA) overtime exemption rules for executive, administrative, and professional employees. If the proposed rules are finalized, the DOL states that over a million current salaried exempt employees will be designated as nonexempt, making them eligible for overtime.
Key Changes to the Salary Threshold
The following key changes have been proposed:
- The standard salary level would increase from $455 per week ($23,660 per year) to $679 per week ($35,308 per year).
- The total annual compensation required for highly compensated employees would increase from $100,000 to $147,414.
- To meet 10 percent of the standard salary level, employers would have the option to use nondiscretionary bonuses and incentive payments that are paid at least annually..
- Salary thresholds wouldn’t automatically increase, but there would be a requirement to periodically assess and revise the salary threshold using the notice-and-comment process.
The proposal doesn’t suggest any changes to the job duties tests. In order to be exempt from overtime, an employee must meet both a salary test and a job duties test. See our Legal Guides, Salary Basis Test for Overtime Exemptions and When Is an Employee Exempt Under Federal Law?.
Tips for Employers
The proposal hasn’t been finalized, so employers need to continue to comply with current federal, state, and any other applicable overtime laws. The proposed rules will have an impact on businesses, so employers are encouraged to review the DOL’s proposal and FAQs. The comment period closed on May 21, 2019. The DOL will review the comments received and decide whether to issue a final rule updating the minimum salary thresholds.
Vigilant members, contact your Vigilant employment attorney if you have any questions.
Not a Vigilant member? For ongoing advice and counsel on this topic, learn about our flat-fee employment law advice. We help employers stay in front of issues before they escalate into costly situations. Stay tuned on our employment law blog for more updates on these changes, and be sure to subscribe to our newsletter to receive updates directly to your inbox.