The DOL issued the long-awaited announcement regarding the Final Rule for White Collar Exemption and Overtime eligibility last week. The ruling is effective January 1, 2020, and it is expected to impact approximately 1.2 million employees who are currently classified as exempt and will be reclassified to non-exempt. Highlights of the criteria published by the Department of Labor and the Society of Human Resource Management include:
- New Exempt salary level is raised to $684/week ($35,568/year) from $455/week ($23,660/year); thus, employees who earn less than $35,568 will be eligible for overtime pay.
- In recognition of evolving pay practices, employers will be able to use nondiscretionary bonus and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level.
- The salary threshold for certain Highly Compensated Employees (HCE) will be $107,000, up from $100,000.
- The new Final Regulations exclude any adjustment to the standard duties test for “White Collar” Exemptions.
- Special salary levels have been established for workers in US territories and in the motion picture industry.
- The new rule does not include automatic adjustments to the exempt threshold as previously proposed.
A fact sheet on the Final Rule to Update the Regulations Defining and Delmiting the Exemptions for Executive, Administrative, and Professional Employees can be downloaded HERE.
Next steps should include reviewing employee earnings’ reports to identify exempt workers who are below the new earnings threshold. Job descriptions should also be reviewed to verify they accurately reflect job duties. A communication strategy and plan should also be developed to facilitate emloyees’ understanding.
Contact us if you have any questions or we can be of assistance. We’re here for you!