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DOL Finalizes Salary Threshold for White Collar Exemptions—Are You Ready?

on Wednesday, 13 November 2019 in Labor & Employment Law Update: Sarah M. Huyck, Editor

After years of anticipation, analysis, and revision, on September 24, 2019, the Department of Labor announced the final rule modifying the salary threshold for the white collar (executive, administrative, and professional) and highly compensated employee exemptions.  

Under the current rule, which has been in place since 2004, to be considered exempt from the overtime requirements of the Fair Labor Standards Act under one of the white collar exemptions—in addition to meeting other factors of the exemption tests—an employee must be paid a salary of no less than $455 per week (which equates to $23,660 per year).  To qualify for the highly paid employee exemption, an employee must be paid a salary of $100,000 per year.

Under the new rule, the salary threshold for the white collar exemptions will go up to $684 per week (which equates to $35,568 per year).  The salary threshold for highly compensated employees will now be $107,432 per year.

These changes to the salary thresholds will take effect on January 1, 2020, so employers should review their wage and hour policies in advance of the New Year to ensure compliance.  The numbers are slightly different from the ones announced in the proposed rule published in March 2019, so do not assume that if you made adjustments in the spring based on that proposed rule that you are in the clear.

Wage and hour compliance can be tricky and is much more complicated than simply ensuring that employees classified as exempt are paid a sufficient salary.  While employers are in the process of checking for compliance with this new salary threshold rule, it might be a good time to dust off and double-check any analysis previously done as to whether employees meet the other required tests for overtime exemption.

Allison D. Balus

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