On September 24, 2019, the United States Department of Labor (DOL) released its final rules for establishing the amounts required to be earned by an employee in order for that employee to be exempt from the Fair Labor Standards Act (FLSA) overtime requirements.
Effective January 1, 2020, the amounts required to be earned by an employee for that employee to be exempt from the FLSA overtime requirements will be $684 per week or $35,568 annually (up from $455 a week or $23,660 a year). For bi-weekly, the salary threshold changes to $1,368, for employees paid on a semi-monthly basis it’s $1,482, and $2,964 for employees paid monthly.
The new total annual compensation requirement for a Highly Compensated Employee (HCE) will be increased to $107,432 from the current level of $100,000.
The rule allows employers to use non-discretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level. Employers must pay exempt employees 90% of the standard salary level ($615.60 per week), and if at the end of the 52-week period the salary paid plus the additional payments do not equal the standard salary level for 52 weeks ($35,568), the employer would have one pay period to make the shortfall (up to 10% of the standard salary level, $3,556.80).
The final rule does not make changes to the job duties test, and it does not include a provision to automatically adjust the salary threshold. While it declined to adopt its earlier proposal to adjust the standard salary and HCE thresholds every four years, the DOL “its intent to update the standard salary level and HCE total annual compensation threshold more regularly in the future using notice and comment rulemaking”.
More resources –