The U.S. Department of Labor (DOL) recently announced its final ruling on changes to overtime rules under the Fair Labor Standards Act (FLSA). Effective January 1, 2020, in order to be considered exempt from FLSA overtime requirements, an employee must earn a salary of at least $684 per week ($35,568 per year). This ruling affects employees who currently qualify as exempt under the DOL’s executive, administrative, or professional FLSA exemption.
Additional changes that may affect certain VLCT members:
- The annual salary requirement for the Highly Compensated Employee (HCE) exemption will increase to $107,432 from the current level of $100,000.
- Employers may include up to 10% of an employee’s non-discretionary bonuses and incentive payments as part of the employee’s standard salary level.
To prepare for these January 1 changes, you need to:
- determine whether any of your exempt employees currently have a salary that falls below the new threshold, and
- for these employees, consider whether to increase the salary to at least the new threshold amount or to reclassify the employee as non-exempt.
Please also note that while the minimum salary amount is required, it alone is not sufficient to make a position qualify as exempt. Exempt positions must additionally meet the requirements of one of the “job duties tests” under the executive, administrative, or professional exemption. For further information, see the DOL’s Wage and Hour Division Fact Sheet 17A.
VLCT encourages members to evaluate all positions and maintain job descriptions that support your determination that a position is exempt.