New Salary Levels for Exempt Employees to Take Effect January 1, 2020

November 14, 2019 –

The United States Department of Labor (“DOL”) has finalized a new rule on the salary threshold for overtime exemption. Starting on January 1, 2020, salaried employees must be paid at least $35,568 annually, or $684 per week to be considered exempt from overtime regulations.

Many employers will remember that in 2016, the DOL attempted to increase the salary thresholds. That increase was blocked by litigation, and sent the DOL back to the drawing board. This increase is much more modest than the one proposed in 2016, but will still impact more than 1 million workers nationwide. Unlike the 2016 proposal, reports do not reflect that advocacy groups will pursue litigation to block this current proposal.

Employers are also given the ability to supplement the salary with bonuses or a catch-up payment before the end of the year. The bonus may account for no more than 10% of the annual income of the employee.  This means that the employer must pay at least 90% of the salary threshold as regular wages. This means the employer must pay a weekly salary of no less than $616. Then, bonuses can account for the remaining 10% to meet the new threshold.

The duties standards for the administrative, executive, and professional exemptions will not change. It is not enough to simply pay a salary; the duties of the employee must also fall within one of the exemptions to be considered exempt – or not eligible – for overtime.

Information about this new rule can be found at the DOL webpage. If you have any questions about the information in this Legal Alert, please contact your Rothberg attorney to see if we can assist you.

Theodore T. Storer, Partner



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