The United States Department of Labor announced yesterday its much-awaited final rule increasing the salary requirements for “white collar” exemptions under the Fair Labor Standards Act. The final rule will:
- Raise the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
- Raise the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
- Allow employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
- Revise the special salary levels for workers in U.S. territories and the motion picture industry.
The final rule will go into effect on January 1, 2020.
As a practical matter, this means that employers who are subject to the FLSA should re-evaluate their compensation structures to make sure that any employees they consider to be “exempt” from overtime are paid enough to meet the new requirement.
Caution: Many employers mistakenly assume that paying employees a salary that meets the salary requirement is all it takes to make them exempt from overtime. To be exempt, employees must also meet one of the FLSA’s detailed “duties” tests. Misclassifying an employee as exempt can subject an employer to liability for backpay, liquidated damages equal to the amount of unpaid overtime, and attorneys’ fees.
At Swenson Lervick, we are here to guide you through the sometimes treacherous waters of the FLSA and other employment law issues. Call Swenson Lervick’s Labor and Employment Law Specialist Tom Jacobson at 320-421-6447, and he will be happy to keep you on course.
Disclaimer: This article is for general information purposes only and is not legal advice.