Effective January 1, 2020, a final rule from the US Department of Labor (DOL) amends the Fair Labor Standards Act (FLSA) regulations implementing the minimum wage and overtime exemptions for executive employees, administrative employees, professional employees, computer employees and outside salespersons as follows:
Standard Salary Level – The minimum annual salary for most exempt employees paid on a salary basis increases from $455 per week (or $23,660 per year) to $684 per week (or $35,568 per year).
Inclusion of Nondiscretionary Bonuses and Incentive Pay: Employers are allowed to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level (but not the $107,432 minimum salary for highly compensated employees), subject to certain conditions.
Highly Compensated Employees: The minimum annual compensation for highly compensated employees increases from $100,000 to $107,432.
Some things think about as a result of this change:
- Are your job descriptions up to date?
- Are your exempt and non-exempt positions properly classified?
- Review your budget.
- If some past exempt positions will become non-exempt due to the standard salary level, will their benefits change as a result of becoming non-exempt?
- Develop a communication plan.