FLSA UPDATE: Department of Labor Issues New Overtime Pay Rules for “White-Collar” Employees
By: Joshua B. Gessling
On September 24, 2019, the U.S. Department of Labor (DOL) released its final rule increasing the minimum salary requirement for white-collar-exempt workers under the Fair Labor Standards Act (FLSA) from $23,660 (annualized) to $35,568 (annualized). The new rule also increases the salary level required for highly compensated employees from $100,000 to $107,432.
Workers classified as exempt under one or more of the white collar exemptions – which includes employees classified as exempt under the executive, administrative, and professional exemptions – must generally receive a minimum salary level, be paid on a salary basis, and actually perform certain job duties. While the DOL’s new rule raises the minimum salary level, the job duties and salary basis tests remain unchanged.
The DOL’s new rule is effective January 1, 2020. It is anticipated that the DOL’s new rule will require employers to reclassify over one million workers from exempt/overtime ineligible to non-exempt/overtime eligible.
Employers are encouraged to consider how this change will impact the continued classification of certain employees as exempt. Employers must decide prior to January 1, 2020, whether individuals making less than the soon-to-be-implemented minimum salary level should receive a pay adjustment or be reclassified as non-exempt/overtime eligible. Employers must also determine the extent to which such changes impact budgets, recruitment, and hiring. As a broader effort to ensure compliance with wage and hour laws, employers may also consider reassessing the job duties of exempt employees who make or will make more than the new minimum salary level as of January 1, 2020, to ensure these employees continue to actually perform the job duties required under the applicable exemption.
If you have questions about how the DOL’s final rule might impact your business, please contact the ZSWS lawyer with whom you regularly work or any member of the firm’s labor and employment law practice team.