Proposed amendments to Fair Labor Standards Act (FLSA) regulations will alter white-collar overtime exemptions. The US Department of Labor (DOL) issued these proposals on March 7, 2019. The proposals will increase the minimum salary necessary to qualify for the executive, administrative, or professional exemptions.
When efforts to increase these salary levels were rejected by a Texas federal district court, the DOL went back to the drawing board and has issued its revised proposals. The new proposals address only the salary tests with the following increases:
- Minimum weekly salary requirement rises to $679: $35,308 per year
- Total annual compensation requirement HCE status rises to $147,414
The increases come with previously unavailable flexibility. DOL proposes that employers be permitted to pay 90% of the weekly threshold ($611.10) in salary and make up the remaining 10% in non-discretionary bonuses and/or commissions. If the weekly salary and (10% of the) non-discretionary compensation did not satisfy the annual salary threshold of $35,308, e
mployers will also be able to make a catch-up payment.
Employers may not use non-discretionary compensation to satisfy the minimum weekly standard requirement for the HCE exemption.
Proposed regulations are open for public comment until May 21, 2019. Thereafter, DOL will evaluate those comments and issue a final rule (which may be altered from the proposed regulations). DOL anticipates that these regulations will become effective in January 2020.
These proposed regulations remind employers to stay vigilant in monitoring exempt classifications. Litigation challenging exempt classifications continues apace (and most often as class or collective actions sweeping in large numbers of employees with high dollar exposure in potential damages).
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