March 8, 2019Client Alert

Department of Labor Issues Long Awaited Changes to Salary Thresholds for Overtime Exemptions

Yesterday, the U.S. Department of Labor (“DOL”) finally announced its much anticipated proposed changes to the salary threshold requirements for the “white collar” overtime exemptions under the Fair Labor Standards Act (“FLSA”). See here.

Despite taking 210 pages to explain them, the DOL proposed fairly modest changes. The highlights:

  • Increasing the current $455/week salary threshold (set in 2004) to $679/week for the Executive, Administrative, and Professional exemptions (“EAP”). This includes Computer Professionals.
  • Thus, the annual equivalent salary threshold would increase to $35,308 per year from the current $23,660/year. This new level is approximately the midpoint between the 2004 threshold and the Obama’s Administration’s court invalidated proposal of $47,476.
  • It increases the “Highly Compensated Employee” (“HCE”) Exemption from $100,000 to $147,414. Notably, this is greater than the Obama Administration’s invalidated proposal of $134,004.
  • Up to 10% of the required annual salary level for the EAP exemptions can be satisfied through payment of non-discretionary bonuses and commissions, and even more for the HCE exemption.
  • The DOL plans to update the FLSA’s salary thresholds every four years after public comment.
  • The changes are anticipated to take effect January of 2020, and will result in an estimated 1.1 million additional workers becoming eligible for overtime pay.
  • The DOL also asked for comments on the proposed changes for 60 days following the publication of the proposal in the Federal Register (which should happen quickly).

Notably, the DOL:

  • Did not make any proposed changes to the “duties tests” of the EAP exemptions.
  • Did not establish different salary levels for different regions of the country.
  • Did not establish different salary levels for different types of employers, such as non-profits or educational institutions.

We will be discussing these proposals and their nuances in detail at an upcoming webinar. Please watch for details.

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