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By: Brad Adler
On Tuesday, September 24, 2019, the U.S. Department of Labor released its long-awaited new minimum salary threshold for the Fair Labor Standards Act’s white collar exemptions (i.e., executive, administrative and professional exemptions). Under the new rule, which is set to take effect on January 1, 2020, the DOL has set the minimum salary threshold at $684 per week, or $35,568 per year (up from $23,660). The DOL anticipates that the updated threshold will expand overtime pay obligations to an estimated 1.3 million additional workers.
Commenting on the new rule, acting U.S. Secretary of Labor Patrick Pizzella stated: “For the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans. . .This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”
Here are the highlights of the new rule:
Finally, while it seems inevitable that employee advocate groups are going to challenge the threshold, which they wanted to see much higher, we still believe it makes sense for employers to prepare for this new rule now. As a part of their preparation, employers should be assessing whether they have employees they are classifying as exempt, but are making less than the new $35,568 requirement. If so, employers need to decide whether to increase the employee’s salary, convert the employee to a non-exempt employee paid on an hourly basis or consider use of the fluctuating workweek method.
Please reach out to Brad Adler (Chair of FMG’s National Labor & Employment Practice Group) at [email protected] if you have any questions or need any assistance in navigating the new overtime rule.