On March 7, 2019, the U.S. Department of Labor (“DOL”) issued its long-awaited replacement of the Obama administration’s controversial overtime rule, raising the minimum salary threshold required for workers to qualify for the Fair Labor Standards Act’s (“FLSA”) “white collar” exemptions to $35,308 per year, allowing more than a million more American workers eligible for overtime.
Currently, employees with a salary below $455 per week ($23,660 annually) must be paid overtime if they work more than 40 hours per week. Workers making at least this salary level may be eligible for overtime based on their job duties. Under the proposed Rule, the salary threshold salary level from raises from $455 to $679 per week (equivalent to $35,308 per year).
Under the proposed Rule, the minimum annual salary threshold for employees to be exempt as executives, administrative, or professional employees will be $35,308. Once finalized, employees who are paid a salary of less than $679 per week will be eligible for overtime pay for all hours worked beyond 40 in a workweek.
Additionally, the proposed Rule would raise the annual total compensation threshold for the highly compensated employee exemption to $147,414 from the current $100,000 and allows employers to use nondiscretionary bonuses and other types of incentive compensation to satisfy up to 10 percent of that salary level.
Compliance is key. Now is the perfect time for employers to ensure proper classification of their employees.
