The Department of Labor (DOL) released its long-awaited final overtime rule on the FLSA exemption for executive, administrative, professional, outside sales, and computer employees (also known as the “white collar” exemptions). The changes are effective January 1, 2020.
What Does This Mean?
- Standard salary level: The final rule raises the standard salary threshold from $455 a week to $684 a week ($35,568 for a full-year worker).
- Highly Compensated Employee (HCE) salary level: The final rule raises the level from the current $100,000 to $107,432 a year.
- No automatic updates: The final rule doesn’t include automatic adjustments, however the DOL indicated that it intends to update salary level thresholds on a more regular basis in the future.
- Bonuses, incentive payments, and commissions: The final rule allows up to 10 percent of the salary threshold to be met by nondiscretionary bonuses and incentive payments (including commissions), provided these payments are made at least annually.
- Duties test: The final rule does not make any changes to the “duties test.”
What Do You Need to Do Now?
- Review current job descriptions to ensure they are up-to-date and accurately reflect the duties performed by employees.
- Analyze your options and develop a strategy for current exempt employees with annual salaries below $35,568.
- Craft your communications to managers and employees who may be impacted by a change in classification status.
- Prepare training for your managers and employees on timekeeping requirements under the FLSA.
How Can MRA Help?
- Our HR Hotline Advisors can answer your questions 24/7 at 866-HR-HOTLINE (866.474.6854) or email firstname.lastname@example.org.
- MRA’s website is loaded with resources, including our comprehensive FLSA Toolkit.
- Our Compensation Professionals can guide you along the right path for your organization if you need assistance with drafting job descriptions, conducting classifications of positions, or developing pay plans.
- The DOL has published a fact sheet, FAQs, and the final rule.